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COMMITTEE ON INSULAR AFFAIRS 

HOUSE OF REPRESENTATIVES 


j.t±jy 

~rT 


A 


COMMITTEE REPORTS, HEARINGS, AND 
ACTS OF CONGRESS CORRE¬ 
SPONDING THERETO 

FIFTY-NINTH CONGRESS 
1905-1907 


COMPILED BY 

R. B. HORTON 



WASHINGTON 

GOVERNMENT PRINTING OFFICE 
1908 











Acts of Congress: Page. 

Agricultural bank in the Philippine Islands. 408 

Amendment of Philippine coinage act of March 2, 1903. 284 

Distribution of public documents to library at Manila, P. 1. 278 

Loan of United States vessel to the Philippine government. 270 

Purchase of coal lands in the Philippine Islands. 189 

Qualification of jurors in Porto Rico. 274 

Regulation of shipping in the Philippine Islands. 230 

Wharves, piers, etc., construction of, in Porto Rico. 265 

Agricultural bank in the Philippine Islands: 

Testimony of— ' 

Hon/William H. Taft. 351,368 

Hon. Henry C. Ide. 306,351,361 

Prof. Edwin Walter Kemmerer.. 319,327, 368 

Prof. Jeremiah W. Jenks. 337,354 

Mr. M. F. Lowenstein,. 375 

Report of committee— 

February 7, 1907 (majority). 387 

. February 7, 1907 (minority).... 393 

February 12, 1907 (minority)... 398 

February 27, 1907 (majority). 405 

Act of Congress, March 4, 1907. 408 

Amendment of Porto Rican civil-government act: 

Testimony of— 

Hon. Tulio Larrinaga. 44,51 

Hon. Beekman Winthrop. 112 

Hon. Robert H. Todd. 41,46,82,90 

Hon. Francis Buso. 96 

Letter of Hon. Beekman Winthrop. # . 149 

Amendment of Philippine coinage act: 

Report of committee, June 12, 1906. 280 

Act of Congress, June 23, 1906 .. 284 

American citizenship for Porto Ricans: 

Testimony of Hon. Beekman Winthrop. 141 

Report of committee, May 16, 1906... 268 

Anaemia in Porto Rico: 

Testimony of Hon. Beekman Winthrop. 143 

Better system of report and accountability by insular governments, report of 

committee, February 27, 1907.. 410 

Cable communication with Porto Rico: 

Testimony of— 

Hon. Tulio Larrinaga. 64 

Hon. Robert H. Todd.. ------ 77 

Catholic Church claims in the Philippine Islands, testimony of Hon. William 

H. Taft. 285 

Coinage in the Philippine Islands: 

Report of committee, June 12, 1906. 280 

Act of Congress, June 23, 1906 . 284 

Courts in Porto Rico: 

Testimony of— 

Hon/Beekman Winthrop. 121,140 

Hon. Robert H. Todd. 71,80 

Hon. Francis Buso. 106 

Delegate from Porto Rico, testimony of Hon. Robert H. Todd. 107 

Distribution of public documents to library at Manila, P. I.: 

Report of committee, May 31, 1906.... 277 

Act of Congress, January 18, 1907 . 278 


3 











































4 


CONTENTS. 


Education in Porto Rico: Pa8re - 

Testimony of— 

Hon. Tulio Larrinaga.- 65 

Hon. Beekman Winthrop. . 131,134,146 

Hon. Robert II. Todd. 84,89 

Hon. Francis Buso.- - 98 

Exemption from taxation of Porto Rican bonds, report of committee, May 16, 

1906.,.- 270 

Franchises in Porto Rico: 

Testimony of— 

Hon. Tulio Larrinaga.. 91 

Hon. Beekman Winthrop...123,132 

Hon. Robert H. Todd. 105 

Judges in the Philippine Islands, testimony of Hon. W. Cameron Forbes- 38 

Leasing of coal lands in the Philippine Islands: 

Testimony of— 

Hon. William H. Taft. 150 

Lieut. H. L. Wigmore, U. S. Army. 159,172 

Report of committee, May 16, 1906 ... 225 

Legal counsel for Porto Rico: 

Testimony of— 

Hon. Tulio Larrinaga. 110 

Hon. Beekman Winthrop. 136 

Hon. Francis Buso... 96 

Loan of United States vessel to the Philippine government: 

Report of committee, May 31, 1906.. 275 

Act of Congress, June 30, 1906 .. 276 

Neutralization of the Philippine Islands: 

Testimony of— 

Hon. Samuel W. McCall. 190 

Hon. Moorfield Storey... 191 * 

Hon. George F. Burgess .... 220 

Philippine Islands: 


Agricultural Bank. (See Agricultural bank in the Philippine Islands.) 

Amendment of coinage act. (See Amendment of Philippine coinage act.) 

Catholic Church claims. (See Catholic Church claims in the Philippine 
Islands.) 

Coal lands. (See Leasing of coal lands, and purchase of coal lands in the 
Philippine Islands.) 

Coinage. (See Coinage in the Philippine Islands.) 

Distribution of public documents. (See Distribution of public documents 
to library at Manila.) 

Governor of the islands. (See Title of governor of the Philippine Islands.) 

Loan of United States vessel. (See Loan of United States vessel to Phil¬ 
ippine government.) 

Neutralization of islands. (See Neutralization of Philippine Islands.) 

Public lands. (See Sales of public lands in the Philippine Islands.) 

Railroads. (See Railroads in the Philippine Islands.) 

Reorganization of departments. (See Reorganization of departments of 
Philippine civil government.) 

Shipping. (See Regulation of shipping in the Philippine Islands.) 


Political Parties in Porto Rico: 

Testimony of Hon. Robert H. Todd. 51,53 

Porto Rican coffee: 

Testimony of— 

Hon. Tulio Larrinaga. 56 ? 119 

Hon. Beekman Winthrop... 116 141 

Hon. Robert H. Todd. ' 53 

Porto Rico: 


Amendment of civil-government act. (See Amendment of Porto Rican 
civil-government act.) 

American citizenship. (See American citizenship for Porto Ricans.) 
Anaemia. (See Anaemia in Porto Rico.) 

Cable communication. (See Cable communication with Porto Rico.) 
Coffee. (See Porto Rican coffee.) 

Courts. (See Courts in Porto Rico.) 

Delegate. (See Delegate from Porto Rico.) 

























CONTENTS. 


5 


Porto Rico—Continued. Page. 

Education. (See Education in Porto Rico.) 

Exemption from taxation of Porto Rican bonds. (See Exemption from 
taxation of Porto Rican bonds.) 

Franchises. (See Franchises in Porto Rico.) 

Jurors. (See Qualification of jurors in Porto Rico.) 

Legal counsel. (See Legal counsel for Porto Rico.) 

Political Parties. (See Political Parties in Porto Rico.) 

Public buildings. (See Public buildings in Porto Rico.) 

Public lands. (See Public lands in Porto Rico.) 

Sanitation. (See Sanitation in Porto Rico.) 

School books. (See School books in Porto Rico..) 

Substitute for district judge. ' (See Temporary substitute for United States 
district judge in Porto Rico.) 

Transportation. (See Transportation in Porto Rico. ) 

University of Porto Rico. (See University of Porto Rico.) 

Water Power. (See Water power in Porto Rico.) 

Wharves, piers, etc. (See Wharves, piers, etc., in Porto Rico.) 

Public buildings in Porto Rico: 

Testimony of— 


Hon. Beekman Winthrop. 112 

lion. Robert H. Todd. 67 

Hon. Francis Buso. 102 

Public lands in Porto Rico, testimony of Hon. William H. Todd. 73 

Purchase of coal lands in the Philippine Islands: 

Testimony of— 

Hon. William H. Taft.„. 150 

Lieut. H. L. Wigmore, U. S. Army. 159,172 

Report of committee, February 12, 1906. 186 

Act of Congress, February 26, 1906 . 189 

Qualification of jurors in Porto Rico: 

Report of committee, May 16, 1906 ... 272 

Act of Congress, June 25, 1906 . 274 

Railroads in the Philippine Islands, testimony of Hon. Henry C. Ide. 301 

Regulation of shipping in the Philippine Islands: 

Report of committee, April 13, 1906. 228 

Act of Congress, April 30, 1906. 230 

Reorganization of departnients of Philippine government: 

Testimony of— 

Hon. William H. Taft. 9 

Hon. Luke E. Wright. 18 

Hon. W. Cameron Forbes. 29 

Reports of committee: 

Agricultural bank in the Philippine Islands— 

February 7, 1907 (majority).. 387 

February 7, 1907 (min rity). 393 

February 12, 1907 (minority). 398 

February 27, 1907 (majority).... 405 

Amendment of Philippine coinage act, June 12, 1906. 280 

American citizenship for Porto Ricans, May 16, 1906. 268 

Better system of report and accountability by insular governments, Feb¬ 
ruary 27, 1907. 410 

Distribution of public documents to library at Manila, P. I., May 31,1906. 277 

Exemption from taxation of Porto Rican bonds, May 16, 1906. 270 

Leasing of coal lands in the Philippine Islands, May 16, 1906. 225 

Loan of United States vessel to the Philippine government, May 31,1906. 275 

Purchase of coal lands in the Philippine Islands, February 12, 1906. 186 

Qualification of jurors in Porto Rico, May 16, 1906. 272 

Regulation of shipping in the Philippine Islands, April 13, 1906 . 228 

Sales of public lands in the Philippine Islands, December 14, 1905. 7 

Temporary substitute for United States district judge in Porto Rico, June 

6 , 1906 . 279 

Wharves, piers, etc., in Porto Rico— 

April 26, 1906.259 

June 2, 1906 (conference report). 262 

Sales of public lands in the Philippine Islands, report of committee, December 
14, 1905. 7 



































6 


CONTENTS. 


Page. 


Sanitation in Porto Rico, testimony of Hon. Robert H. Todd. 78 

School books in Porto Rico: 

Testimony of— 

Hon. Beekman Winthrop. 129,134 

Hon. Robert H. Todd. 84, 89 

Shipping in the Philippine Islands: 

Report of Committee, April 13, 1906 . 228 

Act of Congress, April 30, 1906 .... 230 

Temporary substitute for United States district judge in Porto Rico, report of 

committee, June 6, 1906 . 279 

Title of governor of the Philippine Islands, testimony of Hon. William H. 

Taft...“. 16 


Transportation in Porto Rico: 

Testimony of Hon. Tulio Larrinaga... 62 

University of Porto Rico: 

Testimony of— 

Hon. Tulio Larrinaga. 87 

Hon. Beekman Winthrop... 134 

Hon. Robert H. Todd. 86 

Water power in Porto Rico, testimony of Hon. Tulio Larrinaga. 91 

Wharves, piers, etc., in Porto Rico: 

Testimony of— 

Hon. Beekman Winthrop. 123 

Mr. Miguel Guerra-Mondragon. 232, 243 

Report of committee, April 26, 1906. 259 

Report of conferees, June 2, 1906. 262 

Act of Congress, June 11, 1906. 265 



















59th Congress, ) HOUSE OF REPRESENTATIVES, j Report 
1st Session, f j No. 4. 


SALES OF PUBLIC LANDS IN THE PHILIPPINE ISLANDS. 


December 14, 1905.—Committed to the Committee of the Whole House on the state 
of the Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 
submitted the following 

REPORT. 

[To accompany H. R. 5301.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 5301) setting aside a portion of the proceeds of the sales of pub¬ 
lic lands in the Philippine Islands for school purposes, beg leave to 
report that they have had the same under consideration and recom¬ 
mend that said bill do pass without amendment. 

An extended report upon this bill is unnecessary. 

Nothing is more needed in the Philippine Islands than primary and 
industrial school facilities. This bill has for its object the securing of 
such facilities by the setting aside of a portion of the proceeds of all 
sales of public lands in the islands as a permanent fund, the interest on 
which is to be used only for the establishment and maintenance of such 
schools. No purpose could be more worthy. 

The bill is reported with the unanimous approval of the Committee 
on Insular Affairs. 


7 








. . 

' 

. . !<> 




















REORGANIZATION OF DEPARTMENTS OF THE PHILIP¬ 
PINE CIVIL GOVERNMENT. 


* I 

HEARING BEFORE THE COMMITTEE ON INSULAR AFFAIRS, 
HOUSE OF REPRESENTATIVES. 


Committee on Insular Affairs, 

House of Representatives, 

Friday , January 19 , 1906. 

STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

Secretary Taft. Mr. Chairman and gentlemen of the committee, 
the bill introduced yesterday, No. 12326, is the matter about which I 
wish to speak. I think that I ought to give a little history of the 
growth of the Government in accordance with what seems to be 
Anglo-Saxon method of making a government by experiment. This 
was how the Philippine government was constructed. The Commis¬ 
sion appointed by President McKinley went to the islands in 1900, 
reaching there about the 2d of June. The instructions directed the 
Commission to investigate, as far as possible, into the conditions 
existing in the islands; and this they did from that on to the 1st of 
September, when they took up the work of legislation under the mili¬ 
tary government. 

They were, in fact, nothing but a civil agency of the commander 
in chief in the islands. He prescribed what their particular functions 
should be, and extended to them the power of making payments out 
of the insular treasury. This had been filled by the receipts from 
customs and internal revenue. They were charged with the duty of 
enacting laws affecting the civil affairs in the islands, and of estab¬ 
lishing local government, and thus they went on gradually building 
up the structure which was to be topped by the appointment of a 
civil governor on the 1st of July, 1901. 

When the Commission reached the islands it became necessary to 
divide the work between the members of the Commission. Commit¬ 
tees were appointed, and to the different committees different subjects 
were assigned. In that way Judge Ide was made chairman of the 
committee of finance, as he had been a banker, and he was made chair¬ 
man of justice and the courts, because he was an able lawyer; and to 
Mr. Worcester, who was a scientific man, and quite familiar with the 
interior of the islands, were assigned the public health, agriculture, 
and matters connected with the land, and also matters of local 
importance through the islands. 

To General Wright, who had given considerable attention to the 
police and commercial matters and corporations, were assigned the 
subject of police interisland commerce and the subject of railroads 
and corporations; and to Mr. Moses, then a member of the Commis¬ 
sion, who was previously in the University of California, was given 

9 




10 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

the subject of public instruction and libraries. I had' the business 
of Friar Lands, and then the question of civil service was given me. 
I give this only as a resume, to show how these subjects came to be 
divided. July 1 a civil governor was appointed. Later, on Septem¬ 
ber 6, 1901, an Executive order was issued establishing four executive 
departments—one of the interior, to Worcester; one of finance and 
justice, to Ide; one of commerce and police, to Ide; and one of pub¬ 
lic instruction, to Moses, distributing the work exactly as it had been 
to these same gentlemen as chairmen of committees. 

The Chairman. Do you mean by “ Executive order ” the order of 
the President? Was that the act of 1900? 

Secretary Taft. When the Executive order was made the Philip¬ 
pine government passed an act entitled “An act to provide for the or¬ 
ganization of the four departments, as named,” grouping the various 
bureaus existing and contemplated under them. 

The Chairman. What is the volume from which you are reading? 

Secretary Taft. I am reading from the Public Laws enacted by the 
Philippine Commission, vol. 1, and I think you must have it here, 
and, if not, you ought to have it. There are two supplementary vol¬ 
umes. It is the best way of finding out what the law is in the Phil¬ 
ippine Islands. This act goes on to describe what the departments 
embrace. For instance, section 1 says: 

Whereas the President of the United States, through the Secretary of War, 
has directed the establishment of four departments, to wit, the department of the 
interior, the department of commerce* and police, the department of finance and 
justice, and the department of public instruction, and has appointed persons to 
be secretaries or heads of such departments: Now. therefore. 

The department of the interior shall embrace within its executive control the 
bureau of health, the quarantine service of the marine hospital corps, the bureau 
of forestry, the bureau of mining, a bureau of agriculture, a bureau of fisheries, 
the weather bureau, a bureau of Pagan and Mohammedan tribes, the bureau of 
public lands, the bureau of government laboratories, and the bureau of patents 
and copyrights. 

The. Chairman. Gentlemen of the committee will find the volume 
in the drawers of the table. 

Secretary Taft. If you will turn to page 1056 of the same volume, 
you will find the act of Congress of July 1, 1902, entitled “An act 
temporarily to provide for the administration of the affairs of civil 
government in the Philippine Islands, and for other purposes,” which, 
I think, has been known on the floor of the Senate, and perhaps on 
the floor of the House, as the “ Organic act of the Philippine Islands.” 
In the first section of that act you will see the general confirmation 
of certain things done by the President, to wit: 

That the action of the President of the United States in creating the Philip¬ 
pine Commission and authorizing said commission to exercise the powers of 
government to the extent and in the manner and form and subject to the regu¬ 
lation and control set forth in the instructions of the President to the Philip¬ 
pine Commission, dated April seventh, nineteen hundred, and in creating the 
offices of civil governor and vice-governor of the Philippine Islands, and au¬ 
thorizing said civil governor and vice-governor to exercise the powers of gov¬ 
ernment to the extent and in the manner and form set forth in the Executive 
order dated June twenty-first, nineteen hundred and one, and in establishing 
four executive departments of government in said islands, as set forth in the 
act of the Philippine Commission, entitled “ An act providing an organization 
for the departments of the interior, of commerce and police, of finance and 
justice, and of public instruction,” enacted September sixth, nineteen hun¬ 
dred and one, is hereby approved, ratified, and confirmed, and until otherwise 
provided by law the said islands shall continue to be governed as thereby and 
herein provided, etc. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 11 

That leaves doubt, I concede, of the power of the Commission to 
change the departments as established in the law which I have pre¬ 
viously referred to. The Commission has exercised the right, and I 
am inclined to think, if you consider the law properly, that it has the 
right to change the bureaus. It is not to be conceived that Congress 
intended to limit the power of the Commission in respect to the par¬ 
ticular bureaus set out in the law which I have described and re¬ 
ferred to in the above section; but I think that there is a distinction 
between the organization of the bureaus and the organization of 
the departments, and that proper construction would prevent the 
Commission from changing the name and number of the departments, 
while it may exercise the privilege and right of changing the bureaus 
from one department to another. 

Now, in the administration of affairs it is quite natural that when 
something new had to be done, the easiest way to do it was to organize 
a bureau to do it. Too many bureaus thus were created. It was nec¬ 
essary to appoint a committee to examine into the organization and 
operation of these bureaus, to see if in some cases there were not du¬ 
plications of functions, and in other cases if functions might not be 
united for the benefit of economical government. Accordingly, under 
Mr. Cameron Forbes, recently appointed a member of the Commis¬ 
sion, and several gentlemen, heads of bureaus, an investigation was 
made for the purpose of reorganizing the bureaus and economizing 
the expenditures of the government. An excellent report was made, 
which I have here under my hand—the report of the committee on 
organization of the insular government, No. 1405. They recom¬ 
mended changes, most of which were adopted. The changes cut 
dow T n the expenses to such a point that under appropriations for the 
running of the govefnment after next July the annual cost will be less 
than now by 2,500,000 pesos. 

The Commission having taken the report of the committee, then 
proceeded to enact a law which should express the result. They do 
not follow altogether the recommendations of the committee. For in¬ 
stance, allow me to give you an example: The cold-storage plant, 
which was erected out of the funds of the island government under 
General Otis, which was used, and is still used, to house, keep, and 
preserve all the meats that are brought in from Australia for the 
army, cost about $650,000. That was transferred to the island gov¬ 
ernment because it had been erected out of island funds, and Judge 
Ide, the financial manager, had taken charge of it. It was natural 
that it should go into the bureau of supplies, and ought to have gone 
into the bureau of supplies, which was to be under the secretary of 
public instruction; but Judge Ide had managed it, and knew so much 
about it, that it was retained by him in the department of finance and 
justice instead of having been assigned to the bureau where it ought 
to have gone. 

The Chairman. Do you not think that it would be well to put in 
what Judge Ide said in regard to the revenue derived from the ice 
plant last year, and how it was paying for itself? 

Secretary Taft. Do you mean what he said in his annual report? 

The Chairman. No; the statement he made before our committee 
at Manila last summer. 

Secretary Taft. I was not there at that time. 

The Chairman. It was about $150,000 a year. 


12 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Secretary Taft. Yes; but the only trouble about it is that the 
machinery is wearing out. and it is a business we would like to get 
the Government out of. If we could sell the whole plant for a mil¬ 
lion dollars I should think it would be a good arrangement. The 
plant could be operated to greater advantage by private companies, 
for they would still have to furnish to the Government, and might 
also compete for the trade of the public. The Government would 
get out of the manufacturing business, which we are not well fitted 
to conduct. 

The Chairman. I understood the Governor to say that he was 
offered more than the cost. 

Secretary Taft. The offer exceeded the amount spent in construc¬ 
tion, but the ice plant stands on a lot of land, the most valuable in 
Manila, just at the descent of one of the most important bridges, 
and immediately in the center of the business of Manila; so that, 
when we consider the amount for which it ought to be sold, we 
should not consider only what it cost the Government, but should 
add the value of the land. 

Now, I do not think—and I do not like even to intimate a sus¬ 
picion—that the act which the Commission has passed, reorganizing 
these bureaus and assigning them from one department to another, 
infringes on the confirmation bv Congress of this first section. 

But what I would like to do is to remove all doubt about that by 
the confirmation of what the Commission has done, with such amend¬ 
ments as Congress may see fit to make. It is not at all improbable 
that changes Avill occur in the Commission, and when they do the 
personal character—which, by reason of the history I have described, 
is stamped on the arrangement of these departments—ought to dis¬ 
appear, and there ought to be a logical naming and organization 
of them. 

Mr. Jones. So that hereafter when members of the Commission 
are appointed, they will be appointed with reference to their fitness 
for this particular position, rather than make the position fit the 
individual. 

Secretary Taft. Exactly. For instance, the department of fi¬ 
nance and justice—in no other government that I know of are these 
two departments united. It has happened, but it is quite rare, that 
you can select a man whose experience justifies his being put at the 
head of the treasury department and also at the head of the depart¬ 
ment of justice. I suppose that most lawyers, or those who aspire 
to be recognized as lawyers, feel that they are fitted for any place, 
but still there are lawyers and lawyers, and some are better in finan¬ 
cial transactions than are others, and some are better adapted to aid 
in the assistance of courts than are others. 

That is the object of this bill. I brought the matter to the atten¬ 
tion of the chairman of this committee, and he suggested that I send 
the bill, which I did yesterday. In making up the bill, it was drawn 
up so that it might be discussed. It is quite possible that after the 
committee shall have run over these recommendations—it is a valua¬ 
ble report and one which I recommend to the members of the commit¬ 
tee as a most excellent document—that it will seem better to make a 
little different arrangement. As Mr. Forbes is here, and Governor 
Wright is here, with a view to opening the bids on the Philippine 
Kailway bonds to-morrow, with the permission of the committee I 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 13 

will confer with them, and if they wish to make any suggestions in 
the way of amendment I will communicate them to the committee. I 
think that the bill ought to be refrained with reference to the con¬ 
firmation of this act which I will leave here. 

The Chairman. What is the date of it ? 

Secretary Taft. It is dated October 6, 1905. Possibly it might be 
well to have that printed, if the committee will do so. I suppose I 
could furnish you half a dozen copies, but we have no more than that 
at the Department. 

Mr. Jones. I think that is necessary, because all those matters will 
be discussed at some time in the House. 

Secretary Taft. Yes; it occurred to me that this matter was so 
plainly a mere administrative function of the Government that when 
it w T as understood it would encounter no opposition. 

The Chairman. Why are those fisheries omitted from the depart¬ 
ment of the interior? The language is “except those from the Moro 
provinces and fisheries.” “ Those ” refers to tribes. 

Secretary Taft. I will explain about the Moro provinces: The 
Moro provinces w T ere created by the act of the Commission to include 
in their territory all the territory, and only the territory, wdiich the 
Moros inhabited. It is a separate government adapted to the pur¬ 
poses of that people, and the Commission has delegated its powers of 
local legislation to the Moro civil council, which meets at Zamboanga. 

The Chairman. In view of the fact that possibly the new members 
of the committee are not familiar with it, will you please indicate on 
the map what you mean? 

Secretary Taft. There are two Christian Filipino provinces in 
Mindanao, one the province of Misamis, and the other the province 
of Surigao. The rest of the provinces are all Moro, and the Moro 
Province includes the islands, down here [indicating on map] and 
half of the island of Paragua, which lies off here [indicating on map], 
but is not on this map. All of the territory has been put in one prov¬ 
ince, and is by special act under the legislative council of the Moro 
Province, which consists of a governor, an executive secretary, a 
treasurer, a chief engineer, and perhaps one other official. We have 
assigned for the support of the government customs fees that come 
through the ports in that Moro Province, and, I am glad to say, it 
has worked admirably. 

We gave them sgme latitude in the organization as to local condi¬ 
tions, for the only Mohammedans we have are here. We have ar¬ 
ranged the municipal government, schools, and all other organizations 
to meet the customs of the people as far as possible. There has been 
more prosperity down here than elsewhere. They have not been vis¬ 
ited so much bv rinderpest, cholera, and other interferences with 
ordinary business, so that the customs receipts of the Moro Province 
have increased about 100 per cent since that provincial government 
was adopted. Of course, everything the Moro council does must be 
approved by the Philippine Commission, but they are a quasi-inde¬ 
pendent government, with very much larger powers than the provin¬ 
cial governments in the Christian Filipino provinces have. 

Mr. Jones. When was that executive council established ? 

Secretary Taft. About six months before I left the islands. There 
are a great many non-Christian tribes inside the limits of the Chris¬ 
tian Filipino territory. For instance, there is quite a number of 


14 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. v 

Negritos—the lowest of humanity anywhere—in Negros and in Lu¬ 
zon. They can be seen near Manila at Mariveles. They are little 
people, with kinky hai** and thick lips. There is a much more ad¬ 
vanced people in the island who are non-Christians, known as the 
Igorrotes. 

They were at the Philippine exhibition in St. Louis, and were in 
the habit of going about without extra clothing. They are a moun¬ 
tain people, whose legs are very much developed by reason of the fact 
that when they strike a hill they strike for the top of it; they don’t 
go around it. They are not accustomed to walking on level ground. 
Some of them have been named the u head hunters,” because it is a 
custom among them that when a man wishes to be married he must 
take the head of man living in a neighboring town. The custom has 
now gone out of fashion. They have possibilities of civilization that 
need encouragement by special legislation, and this is the division re¬ 
ferred to here. The secretary of the interior has non-Pagan tribes 
outside of the Moro Province under his particular control. 

This Philippine act provides that the department of the interior 
shall have general, supervision of the non-Christian tribes, except 
those of the Moro provinces, and also supervision of fisheries. 

The Chairman. “ Or those of the Moro provinces ” should be in 
parentheses ? 

Secretary Taft. Yes, sir. 

The Chairman. What other changes would you suggest? 

Secretary Taft. There is one feature that may give rise to some 
objection. It will be observed that the department of justice shall 
have under its control the department of justice and constabulary 
and prisons. The bureau of constabulary has heretofore been under 
the department of commerce and police. 

It had been criticised, and I think that most of the Government 
officials felt that the criticism was more or less just—that the tend¬ 
ency was to make the constabulary too much of a military organiza¬ 
tion. In the suppression of ladronism by the department of con¬ 
stabulary, it was necessary that military discipline should be en¬ 
forced, and military rules should be generally adopted for the gov¬ 
ernment of the corps; but, now, as this was really the only insular 
police, and as it was for the purpose of enforcing the decrees of the 
court and the laws generally, it ought to partake more of a peace 
establishment. Naturally, as such it would come in the bureau of 
j ustice, and I think that is where it ought to go. I think the change 
would be a healthy one, because it is the department where the 
courts are, and, naturally, the investigation should partake more of 
a judicial character than where the organization is that of a military 
force. That is one of the important changes which I introduced 
into this bill. 

Then another change is to change the bureau of prisons from the 
department of public instruction to the department of justice. I 
think there was some discussion as to whether that ought to go to 
the department of justice or the department of public instruction. 
The reason it was included in the department of public instruction 
was because the bureau of prisons necessarily must include the re¬ 
formatories, and have an effect on education, and also because the 
Bilibid Prison, in Manila, is now a great workshop, in which a 
great many Filipinos of possibly criminal tendencies are being 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 15 

taught how to work, and because a great many things are manufac¬ 
tured there for the use of the government. So it ought to be in 
the same department as the bureau of supply. But it seems to me 
as this covers the prisons all over the islands, provincial, municipal, 
and those of the central government, that it ought to go to the de¬ 
partment of justice rather than to the department of instruction, 
because men who are there have been sent there by the courts, and it 
is the execution of the decrees of the courts. 

The Chairman. Why do you think it advisable to include the cold 
storage and ice plant as part of the department of public instruction ? 

Secretary Taft. Because it is properly part of a bureau of supply. 

Mr. Crumpacker. If this division is to be made under the act of 
July 1, aside from the first section of the bill, is it amendatory or 
supplemental ? 

Secretary Taft. It is amendatory. 

Mr. Crumpacker. Did you in the original act provide these sepa¬ 
rate departments? 

Secretary Taft. It was so affirmed in the act. If you will turn 
to page 1056, in section 1 of the organic act, it is provided as follows r 

That the action of the President * * * in establishing four executive 

departments of government in said islands as set forth in the act of the Philip¬ 
pine Commission, entitled “An act providing an organization for the depart¬ 
ments of the interior, of commerce, and police,” etc. 

I suppose that that refers to the first section of the Executive order. 

Mr. Crumpacker. I had in mind the legislative method. I do not 
like this way of making laws. It occurs to me it would be better and 
more convenient if this whole bill w T as put in one section, and made 
to read: “An act entitled ‘An act to amend section one,’ ” and section 
one should be made to read as follows, etc., so that it would stand 
for section one in the subsequent codification, amended on a certain 
date. 

Secretary Taft. I think that is a very good suggestion. 

Mr. Crumpacker. It would be much more convenient, for other¬ 
wise we would have to carry this act to consult another act, etc. 

Secretary Taft. I was going to suggest, if the committee thought 
well of it, that it might be a good thing simply to affirm that act 
“ with the following exceptions, which are hereby enacted,” etc. 

Mr. Crumpacker. The enactment of this bill would accomplish 
the same thing. 

Secretary Taft. I am not so sure. I would like, if possible, an 
express confirmation of what they do, so as to remove any doubt 
about it. If you will examine the first section of the act of 
Congress, I think that you will reach the conclusion that the only 
thing established by Congress to be a law was the Executive order of 
the President establishing those four Departments; and not the act 
of the Philippine Commission, which recites what bureaus were to 
be included in those Departments. 

Mr. Crumpacker. I think the reasons assigned were that they were 
general amendments rearranging section one. 

Secretary Taft. Yes, sir; I think so. 

The Chairman. Would it meet the situation? 

Secretary Taft. Yes. 

The Chairman. Of section one of the act of July 1, 1902? 


16 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Secretary Taft. You would have to repeat all the other language. 

The Chairman. There is not so very much of it. 

Mr. Crumpacker. It would be amended, but it would be more con¬ 
venient, and save money in the end. 

Secretary Taft. I think a transfer of it would be very convenient. 
It would be well to leave the subsequent assignment of the bureaus 
to Departments to the discretion of the President, or of the Commis¬ 
sion, but recognize the disinclination of Congress to increase largely 
the powers of the President, when the powers granted may be con¬ 
sidered in some aspects legislative. 

Mr. Crumpacker. Is not that regulation, rather than legislation? 
We can enact this and put a provision in it authorizing the President 
to make such changes in the assignment as from his experience and in 
his judgment ought to be made in the future. 

Secretary Taft. If you could do that it would greatly facilitate 
matters, but I am not sure but that it might meet with objection, not 
in this House, but in the other. I am not sure of that. 

Mr. Crumpacker. Maybe; we can not speak for the other House, 
of course. 

The Chairman. On page 93 you used the words “ governor- 
general ” and “ secretary.” Those have come into being, so far as 
the Philippines are concerned, since the act of 1905 was passed? 

Secretary Taft. Yes, sir. 

The Chairman. And there is a reference in this to the civil gov¬ 
ernor also? 

Secretary Taft. Yes, sir. 

The Chairman. So that you would have to amend something be¬ 
sides the first section of the act. 

Secretary Taft. Yes; you might say “since known by virtue of 
act of Congress entitled so-and-so, as governor-general.” The title 
by. act was changed from “civil governor” to “ governor-general.” 

Mr. Crumpacker. All the way through, not in terms but by subse¬ 
quent act, it is “ governor-general ? ” 

Secretary Taft. Yes, sir; I ought to add that we have the anomaly 
in the islands now of having a governor-general, while we still have 
a vice-governor. I think if that title was changed so as to make it 
“ vice-governor-general ” it would be more consistent. 

The Chairman. Judge Crumpacker suggests that there be an 
amendment to section 1 of the act, but if section 1 of the act were 
amended and the other sections of that original act were not amended 
there would be different terms expressing the same thing. 

Secretary Taft. I think it would result this way: that if you just 
introduce the term “ provided by law,” by the history of the legisla¬ 
tion, it would not be necessary to refer to the history of the particular 
act which made the title “ governor-general,” instead of “ civil gov¬ 
ernor.” 

Mr. Crumpacker. Of course the title of “ governor ” all through 
this act has already been changed to “ governor-general ” under 
existing law ? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. So that it should read “ governor-general,” and 
there would be no objection to describing the chief as “ governor- 
general ” in the first section. 

Mr. Smith. That is not exactly so. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 1 7 

Secretary Taft. The subsequent sections of the act have been 
amended, and they stand as amended. 

The Chairman. Yes, sir. 

Mr. Rucker. And this act would show that this title was changed 
in the other sections ? 

The Chairman. Yes, sir. 

Secretary Taft. If there is no other question on this I would like 
to be excused now. 

The Chairman. You have suggested that Governor Wright is here. 
Do you think it would be advisable to call him on any of these 
questions ? 

Secretary Taft. That is as you will. He is at the service of the 
committee. He and Mr. Forbes, of course, are very intimately famil¬ 
iar with all this matter. I can speak to them and have them here if 
the committee desires it. 

Mr. Crumpacker. I believe it would be a good plan for the chair¬ 
man to go over this and to prepare the necessary amendments and 
then submit it to the secretary. 

Secretary Taft. We three will act as a committee in considering 
this bill and submit a substitute, if the committee desires it. 

Mr. Crumpacker. It is of importance to keep this organic act 
together as much as we can. 

The Chairman. Then we will reintroduce it and have a meeting of 
the committee on the amended bill—the substitute. 

Secretary Taft. Very well. 

35815—08 - 2 


REORGANIZATION OF DEPARTMENTS OF THE PHILIP¬ 
PINE CIVIL GOVERNMENT. 


Committee on Insular Affairs, 

Tuesday , January 23,1906. 

The committee met at 10.30 o’clock a. m., Hon. Henry Allen Cooper 
in the chair. 

STATEMENT OF HON. LUKE E. WRIGHT, GOVERNOR-GENERAL OF 
THE PHILIPPINE ISLANDS. 

The Chairman. We will resume consideration of House bill No. 
12326, to amend the act of July 1, 1902, as the committee will recall, 
by reorganizing the departments of the Philippine government. We 
have with us this morning Governor-General Wright. General, we 
would be very glad, indeed, to hear from you on the proposed legis¬ 
lation. Have you a copy of the bill ? 

Governor-General Wright. Yes, Mr. Chairman, I have a copy of 
it here. I do not feel sure that I fully understand just what it is 
that is desired of me. 

The Chairman. As to the advisability of enacting this bill into 
law. It may, perhaps, be amended. 

Governor-General Wright. I have read the bill, and I suppose that 
it is in line with and is intended to carry out certain recommendations 
of the committee of which Commissioner Forbes was chairman, and 
which was appointed by an executive order for the purpose of thor¬ 
oughly overhauling all of the bureaus of the government of the Phil¬ 
ippine Islands. 

The Chairman. You said, General, an “ executive order.” You 
signed the order, I believe? You mean executive order of the gov¬ 
ernor-general of the Philippines ? 

Governor-General W t right. Yes, sir. I signed the order, and I 
appointed the committee. It was composed of Mr. Forbes, as chair¬ 
man ; Mr. Shuster, collector of the Port of Manila; Mr. Sleeper, 
a member of the municipal board; and Mr. Carpenter, the assistant 
executive secretary. The purpose of the committee was thoroughly 
to overhaul and investigate the various bureaus and offices of the 
government of the islands, and to determine whether or not there 
could be made any beneficial changes in the interest of economy and 
efficiency. The committee made a very extensive investigation, and 
submitted quite an elaborate report in which they recommended that 
several of the bureaus be abolished altogether, and that others be 
consolidated with other bureaus. And they made various other 
recommendations looking to a decrease in the expenditures for ad¬ 
ministrative purposes. Their recommendations, in the main, were 
adopted by the Commission after a very careful investigation of the 
report, and were embodied in a law which I have here which may be 
of interest to the committee. It is Act No. 1407 of the Philippine 
Commission. 

It it not necessary to go into the details of the changes made, at 
this time at least The Secretary of War, perhaps correctly, although 
18 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 19 

it is a debatable question, was rather impressed with the idea that 
under the provisions of the act of Congress of July 2, 1902, which 
created a form of government for the Philippine Islands—certainly 
a temporary form, and I am inclined to think, also a permanent 
form at the same time—in its first section approved of the act of the 
President of the United States in appointing the Commission, and in 
appointing a civil governor and a vice-governor, and also in appoint¬ 
ing the four heads of departments, or secretaries; or, rather, in 
forming the four departments as set out in act of the Commission 
No. 222, if I am not mistaken. That act created four departments, 
and put all of the bureaus of the civil government under the admin¬ 
istrative direction of one or other of the four secretaries, or of the 
civil governor. Now, this Act No. 1407 to some extent amends Act 
No. 222 of the Commission. It seemed questionable to the Secretary 
of War whether or not the Commission had the power to amend 
Act No. 222, in view of the fact that it had been specifically approved 
by the act of Congress of July 2, 1902. If the Secretary is right 
about that, then the Commission has no power to make any changes 
in the various bureaus of the government of the Philippine Islands 
or transfer them from one department to another, because Congress 
has expressly recognized the existence of those bureaus, and approved 
the act of the Commission in grouping them into specified depart¬ 
ments. I confess that I have not shared that view. I do not think 
that it was the intention of Congress to limit the power of the Com¬ 
mission in that way, or to make a rigid system of government that 
could not be changed, no matter how much it was desired to do so. 
But in a matter of that kind there ought to be no doubt. I think it 
very desirable that there should be some legislation by Congress 
which deals with this subject, either by approving what the Com¬ 
mission has done, or expressing their legislative will, as it may seem 
best to them. 

The Chairman. I notice that the title of one department is changed 
from the department of finance and justice to the department of 
finance and commerce. 

Governor-General Wright. Yes. Perhaps I ought to say that in 
the beginning the act of the Commission, No. 222, w T as passed placing 
the various bureaus under the administrative control of one or the 
other of the four secretaries, or the civil governor, and that the ar¬ 
rangement therein made as grouping various bureaus in the different 
departments was largely controlled by the supposed particular quali¬ 
fications of the secretary for the work in hand. It is easy to be seen, 
in looking at the groups of bureaus under the various departmental 
heads, that many of the bureaus which are in one department have 
no natural relation to, and are in no sense akin to, each other. But 
there are only four secretaries, while there are twenty-odd bureaus 
and several officers, and therefore the grouping had to be more or less 
arbitrary and at the same time with reference to the supposed qual¬ 
ifications and experience of the particular chief of department. 
The personnel of the Commission and the secretaries is changing 
from time to time. It has already changed, and in the future will 
continue to change, so that the reason for the original grouping of 
the bureaus has largely ceased to exist. Now^this bill, as I under¬ 
stand, has been suggested by the Secretary of War. 


20 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

The Chairman. Yes, sir. 

Governor-General Wright. The changes which have been made by 
him are more or less open to the same criticism that I have just made 
of the original arrangement, namely, that there is no natural relation 
between many of the bureaus. 

Mr. Gilbert. Do these bureaus suggested by that act conform to 
the readjustment suggested by this report? 

Governor-General Wright. No, they do not. The secretary has 
created the department of justice, and he has put under that the 
bureau of justice, the attorney-general’s office, and the courts, so far 
as the administrative side is concerned, and also the constabulary 
and the bureau of prisons. There is, perhaps, theoretically, a natural 
relation between the court and constabulary and prisons; but it is, 
to my mind, more theoretical than practical. In other words, the 
qualities which would insure an efficient administration of the bureau 
of justice might be wholly lacking in handling a constabulary of 
7,000 men, which is semimilitary in character. 

The department of finance and justice, over which Judge Ide pre¬ 
sides, has been changed by this bill. Finance is to be turned over to 
the department of finance and commerce, which has been created in 
place of the department of commerce and police, now existing, and 
the functions which Judge Ide now performs, relating to finance and 
banking, are to be turned over to the department of finance and com¬ 
merce. I do not see any especial objection to that if the bureau of 
finance and justice is to be broken up. I must say, however, that I 
doubt the wisdom of making changes unless there is some real reason 
for them; and I am not sure that the scheme here outlined would 
work any better than the old one. I am not prepared to say that the 
grouping of the bureau of justice with that of the constabulary and 
prisons would not work well, provided you had a secretary who 
understood something of military matters. 

The Chairman. I understood the secretary to say, the other day, 
that it seemed to him a more natural arrangement to have finance 
and commerce together. 

Governor-General Wright. That is true. 

The Chairman. And then let the department of justice stand by 
itself, because it is a department that ought to be by itself. 

Governor-General Wright. Theoretically, that is so, and yet there 
is no necessary relation between finance and commerce. Of course, a 
commercial man has to handle large sums of money, and is familiar 
with business methods. The suggestion, Mr. Chairman, which I 
would make would be this, that instead of passing this bill which fixes 
definitely and finally the places of the bureaus in their respective 
departments it would be better to pass a general act authorizing the 
Commission to recreate or to change the bureaus from one depart¬ 
ment to another to meet the exigencies of the service, according to 
the special qualifications of the secretaries as they happen to be 
appointed, subject, of course, to the approval of the Secretary of 
War or the President. 

There is another reason for this. There are several of these bureaus 
which, probably, ought to be abolished altogether. Now, the govern¬ 
ment of the Philippine Islands, so far as its administration goes, was 
formed upon our departmental system here. It was a sort of Wash¬ 
ington in miniature. It is perfectly obvious to me, at least, that 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 21 

while a very elaborate system of the kind that prevails here may be 
necessary for a great country like this it does not follow that such a 
system is necessary for a comparatively small country like the Philip¬ 
pines. One has an immense population and a great amount of exec¬ 
utive work, while the other has a comparatively small population 
and a correspondingly less amount of executive work, is limited in 
resources, and ought not, in my opinion, to be as elaborate as is the 
case here. 

This committee, of which Mr. Forbes is the chairman, has made a 
number of recommendations as to the abolition or consolidation of 
oureaus. In two or three instances we did not feel at liberty to 
adopt those recommendations, although we thought that they were 
good, for the reason that the particular bureaus mentioned had been 
specifically mentioned in the act of Congress of July 1. 190*2, and we 
thought it best not to attempt to alter, even by implication, anything 
that Congress had done. 

Mr. Rucker. You suggest that some act empowering the govern¬ 
ment of the Philippine Islands to change the bureaus, or, as 1 under¬ 
stand. to create bureaus as exigencies or emergencies might require, 
would be better than this specific law 7 we are now considering. Would 
not such a system as that be open to this objection, namely, that every 
change that weuld take place over there would create a new conten¬ 
tion, one officer, corresponding to a cabinet officer here, reaching out 
for other w T orlds to conquer—other bureaus. In order to get rid of 
that objectionable feature, in order to lop that off, would it not be 
better- 

Governor-General Wright. The natural tendency is to let well 
enough alone. We have had nothing of the kind you mentioned, 
in the Commission. It might possibly happen in the future. 

Mr. Rucker. I w 7 ould imagine that each gentleman—with no re¬ 
flection on the man at all—occupying one of those places, from time 
to time, as you suggest—an act providing for a permanent, not tem¬ 
porary arrangement—would have a different arrangement. Would 
this not bring about a chaotic condition of things, more or less? 

Governor-General Wright. That has not been the result so far. 

Mr. Rucker. But I do not think that there has been any general 
authorization of the kind referred to by you. 

Governor-General Wright. We have never assumed, until the 
question w 7 as raised, that the Commission did not have the power to 
make these changes. We have made quite a number of changes 
from time to time. 

Mr. Rucker. I am not criticising that. 

Governor-General Wright. These departments are not really, to 
mv mind, equalized as, perhaps, they might be. The w ork in some 
of them is very much heavier than that of others. And there is an¬ 
other thing to be said in that connection, and it is this, that a bureau 
that may be comparatively unimportant to-dav, may in the course 
of a year or so become vastly important. I have in mind the bureau 
of public lands as an illustration of what I mean. 

The Chairman. The bureau of forestry, too ? 

Governor-General Wright. Yes, sir. Up to the time of our ac¬ 
quisition of the friar lands, w 7 hich amounted to about 400,000 acres, 
the bureau of public lands was a very small affair. It is true that 
it was potentially a very important bureau, because it administered 



22 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

the public-land act which the Commission had passed pursuant to 
the authority of Congress, but it so happens that the Filipinos have 
never entirely gotten through their minds the benefits conferred 
upon them by that act and nothing has been done under it. The 
Commission has been circulating, in the various dialects of the islands, 
the necessary information to inform the natives how to proceed in 
order to acquire homesteads. 

Mr. Gilbert. They do not seem to grasp it at all ? 

Governor-General Wright. No; not up to this time; so that that 
bureau was a very small affair until we came into control of the 
friar lands. The friar lands comprised a total area of more than 
400,000 acres. Then, of course, the bureau sprang into great impor¬ 
tance, and it now requires a great deal of attention from the de¬ 
partmental head, and will require, more and more, a great deal of 
his time, because, as you gentlemen are aware, the act of Congress 
which authorized the purchase of the friar lands provided for their 
sale to the occupants—the tenants. That looks easy enough on its 
face, but when you come to divide up 400,000 acres of land, and to 
sell them to tenants on long time, and to settle conflicting bounda¬ 
ries, and all that sort of thing, it becomes an enormous work, as we 
are finding out to our sorrow. That being so, I suggest that it is not 
wise to fix permanently and finally the position of each bureau—I 
mean to fix a bureau in a particular department for all time. It 
would be better to leave that as a mere administrative detail to be 
worked out by the Commission, with the approval of the Secretary 
of War or the President. 

The bureau of forestry will probably in time become much more 
important than it is now. The mining bureau will in time become 
an immensely more important bureau—in my opinion, at least—than 
it now is. I think there are very large undeveloped mineral resources 
in the islands. On the other hand, there are some of the bureaus now 
in existence which in the near future ought to be abolished or consol¬ 
idated with other bureaus. 

Mr. Gilbert. In changing the personnel of the Commission, would 
there not follow a likelihood of confusion of much of the records of 
the bureaus? 

Governor-General Wright. No; there is no change of the records. 
There is just a change of the departmental head, or in case a bureau 
is consolidated or abolished a transfer of its records to some other 
bureau. 

Mr. Gilbert. But, it would change the subject-matter of the juris¬ 
diction of certain bureaus from time to time, as exigencies might 
arise? 

Governor-General Wright. Yes, sir. The committee of which Mr. 
Forbes was chairman thought that there were several bureaus that 
ought not to exist. We were, trying to economize, and it was very 
easy to transfer these minor duties to some other bureau, and get rid 
of the expense involved in keeping up a separate establishment. 

Mr. Webber. Which ones have you in mind that should be abol¬ 
ished ? 

Governor-General Wright. Do you mean now ? 

Mr. Webber. Yes, sir. 

Governor-General Wright. There were several bureaus abolished. 
The ethnological bureau, for instance. We abolished that, and we 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 23 

shifted around its duties, simplifying them under the recommendation 
of the committee, and the duties of a number of other bureaus. There 
are several other bureaus that I do not just now recall. The coast and 
geodetic survey, if the recommendation of the committee had been 
followed, would have been placed under the bureau of navigation, but 
the commission, upon thinking the matter over, doubted the wisdom 
of that, for the reason that there was a joint arrangement between 
the Philippine government and the United States Coast and Geodetic 
Survey, by which the latter furnished about one-half the money for 
that work out there, and the same is true of the bureau of forestry. 

The committee, I believe, recommended that that bureau go to the 
bureau of agriculture, or to that of public lands, I have forgotten 
which—the bureau of agriculture, I think. We concluded, however, 
that inasmuch as the act of Congress of July 2, 1902, had specifically 
recognized the forestry bureau, we should not make that change. 
And so on; there are several others. 

Mr. Webber. Calculating on the basis of acreage, about how much 
of the public lands to which you refer has been settled by tenants? 

Governor-General Wright. Do you mean friar lands or public 
lands ? 

Mr. Webber. You spoke of them as public lands. I refer to the 
land over which you thought there would be difficulty. How much 
has been disposed of and the title thereto settled? 

Governor-General Wright. None of them have been finally settled. 
We found, when we came to deal with it in a practical way, that it 
was impossible finally to settle the questions of boundaries and titles 
until there had been a careful and accurate internal survey, which we 
are doing under the provisions of the act we drew to meet that very 
contingency. In the meantime in pursuance of the act of the Com¬ 
mission we are making tnree-year leases to those people, so that we 
might have time to make the necessary subdivisions and sales. 

Mr. Rucker. Have there been some questions presented to the 
courts with reference to the titles to these lands ? 

Governor-General Wright. No, sir; there have not. There is no 
question—in our mind, at least—that the holding companies of the 
friar lands had the right to dispose of them. 

Mr. Rucker. There is no litigation as to the title to those lands. 

Governor-General Wright. There has been none so far. There 
will be litigation, doubtless, as to the outer boundaries, because these 
friar lands abutted on private lands, and the boundaries are very old 
in many cases, and the original monuments in some instances have 
been destroyed by lapse of time or otherwise. Moreover there may be 
disputed boundaries as between occupants. 

The Chairman. I think it would be well right there, for the infor¬ 
mation of the newer members of the committee, if you were to ex¬ 
plain fully what is meant by “ friar lands ” and “ holding companies.” 

Governor-General Wright. I think that possibly I can do that. 
The lands which were finally purchased by the Commission under the 
authority of Congress were originally held by four religious orders— 
the Dominicans, the Augustinians, the Franciscans, and the Recoletos. 

Mr. Jones. The Franciscans did not hold any of those lands, did 
they Governor? I understand th#t there were only three orders 
which held the lands. 


24 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Governor-General Wright. I am ashamed to say that my memory 
is a little at fault. 

Mr. Jones. I understood that the Franciscans had only church 
properties and schools. 

Governor-General Wright. I believe you are right as to that. 
There were only three orders. The Dominicans held about one-half 
of the lands. The Augustinians some years ago conveyed their lands 
to a secular company, a real estate company; but the Dominicans and, 
I think, the Recoletos made their conveyances about the time of the 
American occupation. There has been, as you gentlemen are aware, 
a very strong sentiment among the Filipinos in favor of confiscating 
those lands, and the friars evidently at that time did not have a great 
deal of confidence in the benevolence of our intentions there, and they 
put their houses in condition for the situation, so to speak. 

It is generally understood—in fact, it is a moral certainty—that they 
owned the great majority of the stock in those holding companies, 
and in that way had an interest in those lands. The Commission in 
puchasing the lands purchased them from the holding companies. 
In making the preliminary contracts for the lands Governor Taft 
dealt with the holding companies. After we came to examine the 
titles to these lands, which was not done until after Governor Taft 
left, we came to the conclusion that the orders themselves must join 
in the conveyances, so that no question would arise as to the titles. 
As the boundaries were so obscure in many instances, we wanted some 
substantial entity as a guarantor of title. 

Mr. Gilbert. Has the purchase price been paid ? 

Governor-General Wright. Yes, sir; the purchase price has been 
paid. We got the lands in bulk, and we have got to carry out the 
directions of Congress in the matter of their disposition. That is a 
particularly long and difficult job and will involve a great deal of 
labor, and it is going to require some very intelligent work to bring 
the Government out anywhere near even in the transaction. 

The Chairman. Where is the bureau having that in charge now 
located; in what department? 

Governor-General Wright. That bureau is in the department of 
the interior—Professor Worcester’s department. The Commission 
reorganized that bureau, on my recommendation, just before I left 
the islands. The gentleman in charge of the bureau himself said to 
me: “ I am not equal to this job.” He is a very good man, and his 
frankness in this matter is a good indication of this. 

Mr. Webber. If I understand you rightly, none of these friar 
lands have as yet been sold to the tenants in possession of them, but 
they are all now occupied under leases. The fact is they have been 
very slow to lease—that is, a great many of them. They seem to have 
got it grounded in their minds that those lands belong to them. Are 
they all occupied by tenants? 

Governor-General Wright. No ; not all of them, but a large pro¬ 
portion ; I do not know exactly what—probably two-thirds. 

Mr. Webber. And the balance is in what we call “ commons ” in 
the States? 

Governor-General Wright. The balance is mostly in woodlands. 

Mr. Webber. What percentage of the tenants who are occupying 
these lands have been so arranged with that they are paying rent for 
them ? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 25 

Governor-General Wright. I could hardly answer that question 
intelligently without referring to the report. ’ 

Mr. Webber. Can you not give some estimate? 

Governor-General Wright. I should say about a tenth part. The 
tenants have been very slow to come in, and we have had to send men 
out to address them and explain the matter to them. They are very 
suspicious and somewhat ignorant. 

Mr. Webber. Is there any law by which the other nine-tenths who 
are occupying the lands without paying rent can be compelled to 
do so? 

Governor-General Wright. Yes, sir. The act provides for this, 
and makes it the duty of the chief of the bureau to carry out its pro¬ 
visions. If they do not come in and make the arrangements required, 
by attorning and becoming tenants, they can be put off the lands. 
But there has been more or less disturbance in the district in which 
these lands are located, and even in the old days they have been a 
prolific source of disturbance. We hoped that it would allay this 
disturbance if the Government would buy these lands and divide 
them up, and give the people long time for payments, and other good 
terms. However, up to date it has not had that effect. 

Mr. Webber. About what is the amount of income from that 
source— I mean from rental paid by tenants? 

Governor-General Wright. It is very small; at least, it was very 
small when I left the islands two months ago. 

The bureau has been reorganized, and a new American official 
put at the head of it. The Government has been putting new men 
in the field, and I think that before long rents will be paid for these 
lands. Aguinaldo is a squatter on some of these lands, and Trias, 
his next in command in the insurrection, has a lot of them; a number 
of prominent men in Cavite have carved out a slice of the friar lands. 

Mr. Rucker. Did I understand you to say a moment ago that only 
about one-tenth of the lands have been leased ? 

Governor-General Wright. That is the case. However, that is 
merely an approximation. 

Mr. Rucker. I understand—an approximation. Is there a disposi¬ 
tion among these people to occupy the lands that they have not 
leased, and to assert some title (moral, or something of that kind) to 
them ? Did they occupy those lands before the Government acquired 
title to them ? Did the friars administer those lands before the 
United States secured the title to them ? 

Governor-General Wright. No, sir; not since 1898; but prior to 
that time the occupants paid rent to the friars. 

Mr. Rucker. We purchased that land with the knowledge that a 
great part of it was occupied by persons claiming title to it? 

Governor-General Wright. That is so in a large majority of cases, 
but with the certainty that, as a matter of fact, they had no title to 
the land; and it is fair to say that we had delegations coming from 
the tenants, asking the Government to buy the lands, and saying that 
they were prepared to attorn, and all that. Since we bought the 
lands we have had delegations coming in, and just before I left there 
we had a number of occupants from the town of Calamba who said 
that the prices asked by the Government were too high. 

The Chairman. How much is the price? 


26 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Governor-General Wright. The price varies with the quality of 
the land. We are selling it to the people at what it cost us. 

Mr. Jones. That is about $25 an acre ? 

Governor-General Wright. Yes, sir; for the cultivated lands that 
probably is the average price. 

Mr. Parsons. Then they have not paid any rent for a number of 
years ? 

Governor-General Wright. No. 

Mr. Rucker. Could you give some approximate idea of the number 
of people thus holding these lands who do not recognize the title of 
the Government ? 

Governor-General Wright. No; it would be a mere guess. 

Mr. Rucker. A great many of them? 

Governor-General Wright. A large part of the province of Cavite 
was friar land, and they had large holdings in other provinces. 

Mr. Rucker. So that the result of the purchase of these lands is 
that we got a lot of law suits? 

Governor-General Wright. I do not think this will be the final 
result only in those cases where there is a dispute as to where the 
boundary lines lie, or where there is difficulty in finding out who 
are the occupants. This purchase was made by us as a benefaction 
to the holders of the land, and I hope and think this will finally be 
appreciated and that they will acknowledge the title of the Govern¬ 
ment. But men like Aguinaldo and others of that sort are not 
toilers of the soil, in the sense which we understand that term, and 
a serious question may arise as between them and their tenants as to 
who are occupants within the meaning of the act of Congress. 

Mr. Gilbert. Is that their contention, that we have been buying 
from the wrong parties? 

Governor-General Wright. No, sir; they do not really contend that 
in any coherent way. It is just a sort "of vague claim that these 
lands originally belonged to the people and were given to the friars 
by the despotic government; and in some instances they claim that 
the friars induced the people by duress to give them large bodies of 
land, and all that sort of thing" What there is in it it is impossible 
to tell, as a great many of the cases happened a century or more ago. 

Mr. Jones. Don’t they claim also that some of these lands were 
bought by moneys contributed to the church by people ? 

Governor-General Wright. No, I do not think so. 

Mr. Jones. And that they are held in trust by the church for them? 

Mr. Parsons. They claim that in regard to the churches? 

Governor-General Wright. I have never heard the claim advanced 
in the way you put it. Of course the friars bought outright, as the 
records show, by the owners paying cash for the land. They may 
claim that the money with which the lands were bought was orig¬ 
inally contributed by the people. 

Mr. Jones. And that the lands were held in trust for the people? 

Governor-General Wright. Possibly so. The claim as to the 
churches is different. You see, in the Philippine Islands the gov¬ 
ernment was a combination of church and state, and under the con¬ 
cordat between the King of Spain and the Pope of Rome the King 
had the power of appointing the bishops and priests', and was obli¬ 
gated, subject to certain limitations, possibly, to provide them with 
houses of worship and to pay the cost thereof. The Government also 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 27 

paid the priests an annual stipend. Now, the contention of the 
people in the islands is that the churches which were built in this 
way were built by the Government on lands belonging to the munic¬ 
ipality or General Government and that the title never passed to 
the church. 

Mr. Jones. That question is before the courts? 

Governor-General Wright. Yes, sir; that question is before the 
courts. I never thought that contention sound. 

Mr. Webber. At the time of the American occupation were there 
any records there showing that the friars had title to this property? 

Governor-General Wright. Yes, sir. 

Mr. Webber. Wliat we call here “ deeds? ” 

Governor-General Wright. They had a perfect record of title, and 
in many instances they had it for one hundred years or more. 

Mr. McKinlay. In regard to those lands close in and around 
Manila near the waterworks, is that not friar land ? 

Governor-General Wright. Yes, we could not buy that land; they 
•would not sell it. The land court has decided in favor of the Augus- 
tinians, as against the occupants. 

Mr. McKinlay. Are they disposing of it in small tracts ? 

Governor-General Wright. Yes, sir. 

Mr. McKinlay. And the people are buying them, and accepting 
their title as valid ? 

Governor-General Wright. Yes, sir. 

Mr. McKinlay. I visited one estate where the man said he rented 
it from the government—right under Santa Mesa Heights. 

Governor-General Wright. Not from the government. I suppose 
from the order. 

Mr. McKinlay. He said from the government. 

Governor-General Wright. Possibly that may be so. You may 
have misunderstood him, though ? 

The Chairman. Now, gentlemen, I think we had better get back 
to the bill. 

Mr. Webber. I want to ask one more question. Did these friars 
rent the lands to the tenants who were in possession of them when we 
went to the Philippines, by written leases ? 

Governor-General Wright. In some instances, yes. Probably they 
had a regular rental roll showing how much each man held. They 
did not attempt to rent by the year. It was from generation to gen¬ 
eration, really. 

Mr. Gilbert. Did the Spanish Government derive any revenues of 
anv sort from the friar lands- 

Mr. Page. In connection with the survey of these friar lands, has 
that work been done ? 

Governor-General Wright. Oh, yes. 

Mr. Page. And has difficulty been found in locating these lands? 

Governor-General Wright. We had a survey made of the outer 
boundaries. We found in a good many instances that the old monu¬ 
ments had been destroved by the lapse of time, and in some cases 
were destroyed by the revolution, possibly for the principal purpose 
of making the survey difficult. I do not know as to that; I merely 
surmise it. 

The Chairman. Now, General Wright, have you any other sug¬ 
gestions to make concerning the bill? 



28 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Governor-General Wright. I do not know that I have. My sug¬ 
gestion would be that if the committee are of opinion that, in view 
of the provisions of the first section of the act of Congress of July 
1, 1902, the Commission has not the authority to change the de¬ 
partments, the Commission be given that power. 

The Chairman. To change the departments, or bureaus? 

Governor-General Wright. To change the bureaus from one de¬ 
partment to another, and to abolish bureaus when, in their judgment, 
such bureaus are unnecessary, subject to the approval of the Secretary 
of War or of the President of the United States. We have always as¬ 
sumed, from the original instructions, that the Secretary of War 
had the power to veto legislation. 

Mr. Smith. You think it would be advisable to place this beyond 
any question of dispute, bv Congress giving this discretionary power 
to the Commission to abolish bureaus when, after a time, they have 
served their purpose, and to change such of the bureaus from one 
department to another as would be shown by experience to be advis¬ 
able? 

Governor-General Wright. That is my recommendation, and I 
think it is unwise to fix it in a permanent form so that there can be 
no changes except by running to Congress with the status of these 
various bureaus. 

Mr. Page. Is there an } 7 force, accepting your recommendation, in 
changing the names of the heads of these departments as provided for 
in this bill? 

Governor-General Wright. I can not say, to be frank about it, 
that there is any special improvement here in this bill over the old 
nomenclature. The grouping of the bureaus, as I have said, was 
largely arbitrary, because there were only five of us and twenty-odd 
of these bureaus; and these bureaus were grouped with reference to 
the supposed qualifications of the heads of departments. 

The Chairman. Well. General, I think that will conclude your 
examination. The committee is much obliged to you. 

Governor-General Wright. It is a pleasure to comply with the 
wishes of the committee. 

The Chairman. Mr. Commissioner Forbes, the committee will be 
pleased to hear your views on the proposed legislation. 

Governor-General Wright. Please pardon me a moment, Mr. 
Chairman. May I be allowed to say a word to the committee before 
leaving the stand? 

The Chairman. Certainly. 

Governor-General Wright. This report of the committee of which 
Mr. Forbes was chairman, as, I believe I have stated before, recom¬ 
mended a large number of changes—a reduction in the interest of 
both economy and efficiency—and the Commission has acted upon 
that recommendation. 

Indeed, before this report came in there had been many changes 
made in the bureaus by the chiefs themselves because of the investi¬ 
gation. And I made some changes myself by executive orders in 
matters about which I felt sure. I awaited this report before acting 
on other changes regarding which I had some decided convictions, 
but about which I was not certain, as I was not a skilled accountant, 
as was Mr. Forbes, not being sure of myself. But the Commission 
went over the report carefully after it was made, adopted most of its 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 29 

recommendations, and very great economy has resulted. We have 
cut down the expenses a very considerable percentage. I suppose 
that this action will result in a saving of more than $1,000,000 in gold. 

Mr. McKinlay. A year? 

Governor-General Wright. After this year, but the decrease now 
in the appropriations is something over one million one hundred and 
some odd thousand pesos, as compared with the previous year, and that 
after increasing the expenditures for public schools by some 400,000 
pesos. That is, we agreed to apply some of our savings to the 
school system, so that the resulting decrease for this year is about 
$750,000 gold; but nearly half the year had elapsed before our 
appropriation bill was passed. These reforms have to be made grad¬ 
ually. However, the saving even now runs up to eight hundred or 
nine hundred thousand dollars, gold, and in another year it will run 
considerably higher. Gentlemen, I really think that you will find 
the committee’s report well worth perusing in connection with this 
proposed legislation. 

Mr. Smith. Do I understand you to say that by reason of those 
changes you mention there has been a saving of nearly a million dol¬ 
lars per annum, and are we to understand that this saving is not at 
the expense of efficiency of administration in the government ? 

Governor-General Wright. My deliberate judgment is that the 
result is, on the other hand, an increase in the efficiency and not a 
diminution. My observation is that wherever a man is killing time he 
not only is no good, but is a positive injury, inasmuch as he demoral¬ 
izes everybody around him—dissatisfies everybody around him. I 
think that by the cutting out of dead timber and the simplifying 
which was done here, the cutting down of paper work—which had 
grown to enormous proportions, and was really a hindrance to an 
efficient administration—there has been a very marked increase in 
the efficiency of the service. When I say that there were a great 
many men not really earning their w T ages I have reference to the sys¬ 
tem and not to the great body of employees. We have a fine body 
of men in the service of the Philippine government who are inter¬ 
ested in their work, and are in every respect all right. 

Mr. Rucker. I do not understand, then, that this saving of $1,000,- 
000 in a single year is merely the weeding out of dead timber ? 

Governor-General Wright. Oh, no. That is a very small part of 
it. What was really accomplished was the abolishing of certain 
bureaus and the consolidating of others, in order to decrease the per¬ 
sonnel, and in addition to that, to simplify the methods of doing 
business. For instance, we consolidated all the disbursing offices in 
Manila into one—there were a dozen or more of them. Every corral 
of the city had a separate outfit of its own; we brought all of these 
under one head. This, of course, resulted in many economies. 

STATEMENT OF HON. W. CAMERON FORBES, MEMBER OF PHILIP¬ 
PINE COMMISSION. 

The Chairman. Mr. Commissioner Forbes, will you please give the 
reporters your name? 

Commissioner Forbes. W. Cameron Forbes. 

The Chairman. You are a member of the Philippine Commission? 

Commissioned Forbes. Yes, sir. 

The Chairman. You were the chairman of the committee which 


30 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

had in charge this proposition to reduce the expenses of govern¬ 
ment in the Philippine Islands ? 

Commissioner Forbes, Yes, sir. 

The Chairman. And your committee submitted its report ? 

Commissioner Forbes. Yes, sir. 

The Chairman. Will you now, at the outset, please tell the com¬ 
mittee as accurately as possible just what you reported, and what has 
been the result of your report as to any decrease of expenditures? 

Commissioner Forbes. We reported that we found the work of the 
government being very efficiently, done, but that each individual 
bureau was working for itself and, in a great many respects, had its 
own organization. We found, also, that the whole system—which, I 
believe, was modeled after that which prevails here in the United 
States—was cumbersome in the amount of paper work and certain 
other features. We found there were 34 different bureaus or offices 
doing business. In our report we recommended that this number be 
cut down to 21— a reduction of 13. The result was that the bureaus 
thus abolished should.either give up their respective work, or become 
divisions of larger ones. 

I do not think that these changes could have been made at a much 
earlier period. This was due partly to the more settled conditions 
existing in the islands, and also to the bureaus becoming accustomed 
to their work. For example, a large part of the saving is in the con¬ 
stabulary. Formerly we had 7,000 men in the constabulary; that 
number has now been reduced to 5,000. That, of course, meant the 
saving of a very large sum of money in the maintenance of that force. 
Another great saving is in the coast-guard service, which formerly 
kept a large fleet of steamers in operation; and the more settled con¬ 
ditions enabled us to lop off some of these vessels. We have lost two 
of these through wrecks, and we did not replace them; and two 
others have gone into the coast and geodetic survey work, a part 
of the expense of which is borne by the United States Government. 
In some instances we have given up work which was heretofore done. 
Part of the saving comes in there. 

In other instances we found that the saving was merely an out- 
and-out reduction of the expenses incident to the transaction of the 
business of the government, the various bureaus being able to con¬ 
tinue their business without loss of efficiency. They could do the 
same business as formerly with a reduced force and less expense. 
We analyzed the workings of every bureau. We went right into the 
office of the chief of the bureau where the work was being done, and 
made a cross-examination of this official. We also examined every 
one of his men, and got their individual opinions relative to their 
work, and how they thought it could be bettered. We spent several 
months at this kind of work, putting in five hours a day. There 
were four of us on the committee, and after jointly cross-questioning 
the chief we each of us took certain of the lesser cferks and examined 
them separately, going into the greatest detail. 

I have here a copy of the report of our committee, and it contains 
some tabulations which I can show any member of the committee 
who may be interested in seeing them. 

The Chairman. I wish you would read them, if you can. Sum¬ 
marize the savings, I would say. 

Commissioner Forbes. I will refer to the reduction in bureaus in 
the first place. We abolished the bureau of archives, and the “ Offi- 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 31 


cial Gazette,” which was published as a separate office, and put those 
two under an executive bureau, under the governor-general. Then 
we put the Civil Hospital and Sanitarium under the bureau of 
health, they having been run separately before; and we recommended 
that the quarantine service be so placed. This service is now run by 
officers of the United States Government, paid by the government of 
the Philippine Islands, and the Commission did not think it advisable 
to accept this last-mentioned recommendation; and the quarantine 
service remains as a separate bureau. 

The bureau of science—which has the government laboratories— 
and the mining bureau were recommended to be consolidated into 
one bureau. We recommended that the bureau of foresty be included 
in the bureau of agriculture. The Bureau of Forestry here in the 
United States is in the Department of Agriculture. This recomr 
mendation, however, was not adopted by the Commission, because 
the act of Congress of July 1, 1902, specifically states that the 
bureau of forestry shall certify what are agricultural and what are 
forest lands, and they thought that such action might have some effect 
on the validity of titles. If we could get Congressional legislation 
enabling us to merge the bureau of forestry we would like to put it 
into the bureau of lands under the department of the interior. In 
the new bureau of public works our committee put the bureau of 
engineering, the bureau of architecture, the bureau of improvements 
in Benguet province, and the duty of the care and custody of public 
buildings—hitherto run separately. 

Mr. Smith. Is this the new bureau which you have just mentioned ? 

Commissioner Forbes. It includes those four functions which were 
formerly separately performed. We took away from the constab¬ 
ulary the telegraph and signal-service business of the archipelago, 
and put them into the bureau of posts. This is the common practice 
in other countries—Japan has it, and, I think, the English Govern¬ 
ment usually has the posts and telegraph connected. We recom¬ 
mended the bureau of navigation to be formed of the bureau of coast 
guard and the coast and geodetic survey; but, as the governor-gen¬ 
eral has explained to you, the Commission did not accept that recom¬ 
mendation, as it did not know how the United States Government 
would look on a lessening of the importance of a bureau, a large por¬ 
tion of the expenses of which they were paying. The office of asses¬ 
sor of the city of Manila was abolished and put into the office of in¬ 
ternal revenue, which resulted in a very great saving to both the city 
of Manila and to the insular government. 

The bureau of education took in the ethnological bureau; the 
library, which had been run as a separate office before, and the bureau 
of supplies, which was composed of the purchasing agent and the cold 
storage and ice plant.' The Commission did not adopt our recommen¬ 
dation to put the bureau of cold storage and ice plant under the bu¬ 
reau of supply, but I see that Secretary Taft has recommended that 
in this bill. TThose are the principal reductions. 

The Chairman. Mr. Commissioner, will you please turn to the re¬ 
port and show what are the increases and the reductions, and then 
what is the net result, one way or the other. I mean in the expendi¬ 
tures. 

Commissioner Forbes. I think I would like to say before we get to 
this that I personally am very thoroughly dissatisfied with the whole 
accounting system that is in operation out there. I think it ought 


32 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

to be changed. The system of government accounting does not take 
into consideration the value of the plants. That does not appear on 
the books anywhere, and permanent improvements go into current 
expenditures. There is therefore no way of telling from the reports 
how much of the money shown by the report of operation to have 
been expended by the different bureaus has been put into permanent 
improvements, and how r much of it is for current or routine operation. 
I think that those should be separated, as in private business, and I 
have made a recommendation to this end, which I think will be 
adopted. These figures also contain certain inter-bureau payments; 
that is, where the transaction is between two bureaus and has no rela¬ 
tion to outside parties. Such transfers should not appear as an ex¬ 
pense to the government. But the total figure of all those items, with 
the exception of the largest public works, which are performed by the 
bureau of public works, the port works, and the Benguet road, was 
1^16,450,000—about eight million and a quarter dollars gold, in 
United States currency. 

Our recommendations, which have been adopted in the main, pro¬ 
vide that each bureau charges for its services, so that we should not 
have any free service performed by one bureau for another. We find 
a great tendency to reckless expenditure where anybody gets free 
service. We want to cut that out, and have abolished even the frank¬ 
ing privilege business in the posts, wdiich was much abused. Our 
recommendation for total annual expenditures aggregate 1^14,469,000, 
and that of this amount 1*433,000 are for inter-bureau payments. 
This would mean 1*2,422,000 annual savings, provided all of our rec¬ 
ommendations were adopted. They were not all adopted. 

The Chairman. As adopted, what is the saving? 

Commissioner Forbes. I do not know. You see. the committee was 
acting from the 1st of last April until the middle of September. 
The changes were put into effect at different times, and only a few 
could be done administratively. Some of the bureaus began with the 
fiscal year on the new basis. Others said they could not do it until 
the beginning of the next fiscal year, notably the bureau of audits. 
They had a lot of back work to catch up. They were obliged to 
increase their force in order to carry out our recommendations. The 
result has been that until the beginning of the next fiscal year (the 
1st of June) we do not begin on the new basis that we have adopted. 
The saving for this fiscal year by the appropriations amounts to about 
$750,000 gold, United States currency, which is about three-fifths of 
the saving we recommended. The largest part of that saving was 
in the constabulary, and the reduction was ordered in September. 
We can not reduce the enlisted men very rapidly, as some of them 
are in active service; and I expect that they will have completed 
the reduction to the number of 5,000 men on the first of this month— 
the 1st of January. 

As you will see, nearly half the year was gone before we could get 
the benefit of that saving. Thus, it is very hard to figure just what 
the saving has been this year, except by analyzing the appropriation 
that has been made, which amounts to $750,000 United States cur¬ 
rency, or three-fifths of the total; and I think that next year we can 
show a saving of the full amount. We shall not create a large sur¬ 
plus, and we are using part of the saving for educational purposes. 
An analysis of the appropriations will show that there has been less 
money spent in the accounting and maintenance of the customs and of 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 33 


the forestry departments and of the bureau of navigation, etc., with 
relation to the mere machinery of government, and this money is being 
spent on public works and for schools. 

The Chairman. You think that the reduction in the number of the 
bureaus and their consolidation will result in a considerable diminu¬ 
tion of the expenditures, do you not? 

Commissioner Forbes. Yes, sir. I have not an exact statement 
showing- 

The Chairman. What does it aggregate? 

Commissioner Forbes. About $1,200,000 gold. 

Mr. Parsons. Is that in salaries or is it in supplies? What consti¬ 
tutes that amount? 

Commissioner Forbes. It is a little of everything. Some of it is in 
salaries and some of it in supplies. 

Mr. Parsons. How greatly will it reduce the number of employees ? 

Commissioner Forbes. I have not the exact figures as to that. 

Mr. Parsons. Quite a number? 

Commissioner Forbes. There was a reduction of 2,000 men in the 
constabulary. 

Mr. Rucker. How much of a saving was there in the constabulary? 

Commissioner Forbes. About 1*450,000 in salaries. 

The Chairman. That is $225,000 gold? 

Commissioner Forbes. Yes, sir. The saving in clothing, equip¬ 
ment, and the like was TT50,000; barracks and quarters, 1*40,000; 
transportation, 1*100,000; sustenance, 1*120,000. 

The Chairman. Does that relate exclusively to the constabulary ? 

Commissioner Forbes. Yes, sir; to the constabulary alone. 

The Chairman. .There will, I believe, also be a considerable reduc¬ 
tion in the number of civilian employees—clerks? 

Commissioner Forbes. In the constabulary? 

The Chairman*. No; in your general reorganization of the bureaus. 

Commissioner Forbes. Yes, sir; there will be. 

The Chairman. Can you approximate the number? 

Commissioner Forbes. No, sir; I can not. 

Mr. Rucker. The constabulary reduction will come to about 
1*800,000, or $400,000. This Avould be about one-third of the total 
reduction of expenses. 

Commissioner Forbes. Yes, sir; about one-third of the total reduc¬ 
tion. 

The Chairman. You are speaking now of the constabularj^ ? 

Commissioner Forbes. Yes, sir; the constabulary. 

The Chairman. Do I understand you to say that that reduction of 
$430,000 relates exclusively to the constabulary? 

Mr. Rucker. That is what I understood Commissioner Forbes to 
say. 

Mr. Jones. Mr. Forbes, can you state what was the cost of the con¬ 
stabulary before this reduction, and what it will be after the reduc- 
tion ? 

Commissioner Forbes. Yes, sir. The cost of the constabulary last 
year _that is, the year ending June 30, 1905—was 1*4,172,000, which 
sum included the telegraph business of the islands. Under this bill, 
as I have said, that business has been turned over to the bureau of 
posts. 


34 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Governor Wright. It included the furnishing of supplies to the 
people all over the islands ? 

Commissioner Forbes. It included the commissary work for the 
school teachers all over the islands, etc. That duty has been taken 
away from the constabulary and transferred to the bureau of supply. 

Mr. Page. In the recommendations made by your committee which 
were not accepted by the Philippine Commission, were all of those 
which were rejected so rejected because they came in conflict with 
some existing law ? 

Commissioner Forbes. No, sir; there were 350 specific recommenda¬ 
tions made by the committee in its report, about three-fifths of which 
were adopted, and the balance, for various reasons, turned down. I 
think that all but one of those which had to do with the abolition of 
bureaus were rejected for that reason. 

The Chairman. We will have to suspend, as the noon hour has 
arrived. 

Commissioner Forbes. I want to complete my statement to Mr. 
Jones, if I may be permitted to do so. The expenses of the constab¬ 
ulary after the reduction in question will be $3,000,000, or PT,172,000 
reduction. The difference between that and the saving of approxi¬ 
mately P800,000 shown above is the cost of the telegraph service, 
which approximates $400,000, or one-tenth of the constabulary cost. 

The Chairman. Commissioner Forbes, how long will you be in the 
city? 

Commissioner Forbes. Until Friday. 

The Chairman. We will call you again, if we may. 

Commissioner Forbes. I will be at your service at any time. How¬ 
ever, I may have to be in New York one day, on railway business. 

The Chairman. Do you know what day that will be? 

Commissioner Forbes. To-morrow, I think. 

Mr. Rucker. Ought not this report to be printed ? 

. The Chairman. I suppose that the Philippine Commission will 
print it. 

Commissioner Forbes. The committee made the report confiden¬ 
tially to the governor-general, and the Commission decided not to 
print it. The Secretary of War, I believe, has suggested that it be 
printed by Congress. 


REORGANIZATION OF DEPARTMENTS OF THE PHILIP¬ 
PINE CIVIL GOVERNMENT. 


Committee on Insular Affairs, 

House of Representatives, 

January 25, 1906. 

STATEMENT OF HON. W. CAMERON FORBES—Continued. 

The Chairman. You will please proceed with your statement, Mr. 
Commissioner. You were speaking the other day, 1 think, about the 
expenditures of the civil government in the Phillipine Islands and 
the proposed saving for the fiscal year ending June 30, 1907? 

Commissioner Forbes. Yes, sir. 

The Chairman. Will you please give the figures on that subject as 
nearly as possible? 

Commissioner Forbes. Our committee recommended reductions in 
the operation and the running expenses of the government, based on 
doing the same business that they did last year or the year before, and 
they estimated that if their recommendations were adopted the saving 
would be $2,400,000 gold United States currency. We did not rec¬ 
ommend, however, that they make all of that reduction, because we 
thought they ought to increase their business somewhat. We just told 
them that they could do their business at that decreased expenditure. 
We wanted to see them increase their business. 

The Chairman. In the law which you propose, what would be the 
saving over the previous annual expenditures? 

Commissioner Forbes. It would come to $1,300,000 a year, gold. 

The Chairman. Will you please look at House bill No. 12326? 
What do you think of the provisions of that bill? 

Commissioner Forbes. I think it extremely desirable that we be 
given authority to transfer bureaus from time to time from one 
department to" another if the exigencies of the situation seem to 
demand it. I think that the experience of this committee, and the 
savings which we are able to make, would demonstrate that. We felt 
ourselves somewhat hampered, as Governor Wright explained, as to 
how far our power extended in the matter of transferring bureaus. I 
agree entirely with what Governor-General Wright said in regard to 
the transferring of departments. I think that the departments have 

35 



36 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


worked well as they are. But if the Secretary of War wishes to 
change the department of commerce and police to u finance and com¬ 
merce” 1 can not see any very strong objection to it. 

Mr. McKinlay. Have any bureaus been abolished entirely ? 

Commissioner Forbes. Yes, sir; a number of them. 

Mr. McKinlay. Did you consider that you had authority under the 
law to do this? 

Commissioner Forbes. Yes, sir. 

The Chairman. How many did you abolish? 

Commissioner Forbes. We abolished nine. They were not all of 
them bureaus. Some pf them were offices. We had the power to 
create them. 

Mr. McKinlay. I thought you said, the other day, that you abolished 
twenty-one bureaus. 

Commissioner Forbes. No: we recommended that there should be 
21 left. We thought that the number should be cut down to 21, but 
the Commission did not accept our recommendation, and they were cut 
down bv 9. As I explained the other day, we did not act because we 
did not think we had the power to do so. I do not think that 1 can 
emphasize that too strongly, because circumstances might arise which 
would necessitate our making certain changes. One case has come up 
now in the bureau of customs and the bureau of internal revenue. 

The bureau of customs is the one which has taken in most of the rev¬ 
enues of the islands. I think that the internal-revenue law that the 
commission passed created the bureau of internal revenue; and if the bill 
now before Congress (the Philippine tariff bill) becomes a law the 
customs will decrease very rapidly during the next three years, and 
there will then be free trade with the United States. The customs will 
become a very small part of our receipts, and we will have to depend 
on the revenues from the internal-revenue law. That might make it 
necessary to change some of the bureaus as to salaries and personnel, 
and consolidate some of the lesser bureaus in order not to have too many 
small ones. I do not think that we ought to have to come to Congress 
each time we wish to make such changes. It would be cumbersome 
to Congress, and there would be great delay to us. I do not really 
believe that there would be any question- 

Mr. McKinlay. Is it your idea, then, that the Commission be invested 
with exclusive jurisdiction or discretion to change bureaus from one 
department to another? 

Commissioner Forbes. Yes; subject, of course, to the approval of 
any authority here that you might name—the President or the Secre¬ 
tary or War, or both. I have another instance in mind that I might 
mention. We have a bureau of port works for the construction of 
ports. That bureau has expended a very large sum of money—nearly 
$4,000,000—in constructing the harbor of Manila, which is now nearly 
completed, and it has also expended over $1,000,000 in developing 
other public works. 

Mr. McKinlay. Is that being done out of the treasury of the 
Philippines? 

Commissioner Forbes. Yes, sir. 

Mr. McKinlay. No part of the expense has been borne by the 
United States? 

Commissioner Forbes. No, sir; the officer in charge of the work has 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 37 

been a United States Army officer detailed by 7 the Engineer Department 
for the purpose. We did . not put the bureau of port works in with 
the bureau of Public works, simply because we did not want to put 
an officer of high rank under a civilian official. We made him report 
directly to the governor-general at first, and afterwards to one of the 
secretaries. That bureau is going to become of much less importance 
when these harbors are completed. The harbor of Manila is already 
done. And, moreover, we had to have a civil engineer there in con¬ 
nection with the harbor works. You all know that almost all of the 
harbor work in the United States is *superintended by an army engi¬ 
neer. We had to ask that an army officer be detailed to duty there. 
His assistant is a civil engineer—that is, a person from civil life. We 
will probably want to consolidate the bureau of port works with the 
bureau of public works. 

Mr. Jones. Who is the engineer officer to whom y r ou refer? 

Commissioner Forbes. An army officer by the name of Maj. Walter 
L. Fisk; his civil assistant is an official by- the name of Delano. 

Mr. Hubbard. Then, so far as your recommendation goes, it would 
be to leave the distribution of these bureaus and the assignment to 
them of other bureaus just where it is now. namely", in the Commission? 

Commissioner Forbes. Just where we think it is. There seems to 
be some doubt as to the extent of the Commission’s power in this 
direction. 

Mr. Hubbard. But the bill which we are considering now makes an 
absolute distribution now of these several bureaus and departments. 
Is that not so? 

Commissioner Forbes. Yes, sir. 

Mr. Hubbard. Is that your wish, or is it your wish that it should 
be made flexible? 

Commissioner Forbes. My wish is that it should be made flexible. 

Mr. Hubbard. This bill, instead of making it flexible, fixes it 
absolutely. 

Commissioner Forbes. T think that it would be better to amend 
this bill so that we should have the power to act as we have already 
acted, so that we should be surer of our power to act in these cases. 
You can see what a difference it would make in the cost of running 
the bureaus if we had not made these cuts that we did. We began 
the reduction on the very date that we made the discovery 7 where a 
saving could be made. 

Mr. Gilbert. In those instances where you abolish bureaus, do you 
consolidate the employees of the bureau abolished with some other 
bureau, or are they obliterated entirely ? 

Commissioner Forbes. It depends entirely on what happens in the 
consolidation. We do not do it if one bureau becomes a division of 
another bureau; and we do not do it unless some marked economy or 
increase in efficiency is to be gained thereby. 

Mr. Gilbert. How much did you decrease the personnel of the 
employees in this abolishing of nine bureaus? What is the extent in 
the reduction of the personnel of the service? 

Commissioner Forbes. I can not answer you that, sir. I do not 
know the number of men we reduced. I know that^ it made a very 
material reduction all through the insular service. The Philippines 
service changes very rapidly. Men find that they do not like it out 


38 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


there, and they come back. We did not discharge a very large num¬ 
ber of men, but we abolished positions as vacancies occurred. We 
consider it rather a hardship to get men out there in the Philippines 
and tire them out. if they have done good service, and we went a little 
bit slow in amputating these positions, because we did not wish to lose 
the men we had there who had been so efficient. We had the Govern¬ 
ment officials on the lookout for good men, and in a number of instances 
where men were in the United States on leave of absence they were 
cabled that they could not come back. 

Mr. Gilbert. You do not enlarge the force to secure positions for 
the men who have gone out there ? There are no more places retained 
than are absolutely necessary ? 

Commissioner Forbes. I should say that in our service out there 
the efficiency of the * Government service has been the controlling 
factor. I can hardly think of a place that has been created in order 
to look out for a person, even though there are some very meritorious 
instances where we thought that the Goverment ought to look out for 
such persons. 'It has been pretty hard-sometimes to do it where a 
man has rendered meritorious service. 

Mr. Parsons. 1 notice that the bill under discussion provides that 
the department of justice shall hav eunder its control both the bureau 
of justice and the bureau of constabulary. 

When the Congressional party were out in the Philippines last sum¬ 
mer, there seemed to be some complaint that those who were interested 
in the enforcement of the law were having too much to do with the 
judiciary. 1 do not think that the complaint was justified, but does 
not that contention arouse such criticism ? 

Commissioner Forbes. I do not think so. Because there is some¬ 
thing that does not appear on the face of the bill. The bureau of jus¬ 
tice is not the judiciary, and the idea is that the judiciary should appear 
as a separate bureau, and not be responsible to any of the heads of 
departments. The bureau of justice is the attorney-generaPs office, 
and will include the prosecuting attorneys, or what we call the 
“fiscales”—the attorney-general and the various assistant attorneys— 
but they will not have anything to do with the judicial department. 
The complaint was the classification of the bureau of justice with the 
bureau of judiciary, and the constabulary with the judiciary. That 
. was the point, was it not? 

Mr. Parsons. Yes; that explains it. 

The Chairman. Is there anything else which you want to say to the 
committee, Mr. Commissioner? 

Commissioner Forbes. No, sir. 

Mr. Rucker. How are the judges appointed out there? 

Commissioner Forbes. The judges are appointed b} r the governor- 
general. 

Mr. Rucker. With the approval of the Commission? 

Commissioner Forbes. With the approval of the Commission, I 
believe. Am I not right as to that, Mr. Chairman? 

The Chairman. Yes, sir. 

Commissioner Forbes. I was not entirely sure whether the approval 
of the Secretary of War was necessary. I know that the judges of 
first instance are appointed out there. 

The Chairman. The President appoints the judges of the supreme 
court. They have to be confirmed by the Senate. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 39 

Mr. McKinlay. Does the President appoint the ordinary judges— 
those of the courts of first instance? 

Mr. Rucker. Corresponding* to our circuit courts in the United 
States, what is the tenure of these judges? 

Commissioner Forbes. I think they are permanent appointments. 
I do not think that their tenure of office is limited. 

The Chairman (reading from section 9 of the act of Congress of 
July 1, 1902). 44 The judges of the court of first instance shall be 
appointed by the civil governor, by and with the advice and consent 
of the Philippine Commission,” etc." 

Mr. Rucker. These judges are appointed for life—during good 
behavior? 

The Chairman. There is no definite term, I believe. 

Mr. Smith. Does the organic law of the Philippine Islands provide 
for how long a time the judges shall be appointed? 

The Chairman. No, sir. There has been some complaint out there 
about the assignment of judges to circuit cases. 

Commissioner Forbes. Yes, sir. 

The Chairman. What, if anything, has been done to change the 
authority to assign judges? 

Commissioner Forbes. I do not think that the complaint is justified 
at all. I think there was an organized effort to find fault with some 
things the Administration was doing not very long ago, and this was 
one of the complaints which was brought out. I have not seen any¬ 
thing in my experience there that would lead me to think that there 
was any cause for complaint, or any cause for criticism. 

The Chairman. Do you think it is well for the executive officers to 
assign judges, or to have anything to do with the judicial functions? 

Commissioner Forbes. I think that their authority should be as 
small as possible. 

The Chairman. After the appointment of a judge, do you not think 
that in discharging his duties he should be wholly beyond the control 
or influence of the executive? 

Commissioner Forbes. Yes, sir. But they have, I think, several 
judges at large. Out there in the Philippine Islands, these judges go 
away on vacations, and there is all sorts of difficulty about transporta¬ 
tion—in getting from one court to another. 

The Chairman. What would you think of giving the power of 
assignment to two or three judges of the supreme court of the islands 
rather than to leave it with the governor-general’ or with any number 
of members of the executive body? 

Commissioner Forbes. I prefer not to express an opinion on that 
point, Mr. Chairman. I am not a lawyer. I have never dealt with 
courts. This subject is not in my department, and I really have not 
thought sufficiently about the subject to feel that my opinion would be 
of value to you or really do myself any justice. I have not got the 
facts, and I have not spent the time on it necessary to form an opinion. 
I believe that the integrity of the judicial opinion should be left alone 
as much as possible. 

The Chairman. In my State it would look strange to have the gov¬ 
ernor of a State assign the judges in his discretion. 

Mr. Page. In my State this is always done for extra time. 

The Chairman. Is that a fact? . 


40 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Page. Yes, sir. 

Mr. Jones. But the judges are not appointed by the governor ? 

Mr. Page. No; they are elected by the people, but they are assigned 
for a certain time to hold court. 

Mr. Rucker. It would not be wise for the governor to appoint a 
judge and then designate that judge for a certain case. 

The Chairman. That is not the point. Where a judge is appointed 
for a certain circuit, and then to have the governor of a State, in his 
discretion, without any sufficient reason, assign some other judge to 
that circuit to try a particular case- 

Mr. Page. I do not mean to say that. 

Mr. Jones. I understood you to say, Mr. Commissioner, that no 
criticism of that custom has come to your knowledge. 

Commissioner Forbes. No; I said that nothing that had been done 
as far as I had seen seemed to me worthy of criticism. I have heard 
that it has been criticised. 

Mr. Jones. There has really been a great deal of complaint in the 
islands, I think. 

Commissioner Forbes. I would like to tell the committee of a par¬ 
ticular instance which came up last year. 

Mr. Jones. The Roas case? 

Commissioner Forbes. Yes, sir. It was very seriously misrepre¬ 
sented. 

The Chairman. I do not think that we want to go into any particular 
instance, but just the general question. 

Commissioner Forbes. It arose in the case of a man being granted 
leave of absence. This man was overdue on his leave of absence, and 
he could have been told not to go. The judge who would take his 
place would be designated by the secreta^ of finance and justice. 

Mr. Olmsted. Does that secretary designate a particular judge to 
try a certain case or for a particular term of court? 

Commissioner Forbes. He holds a particular term of court while 
the other judge is away, and tries all cases that come up. 

Mr. Parsons. But it was known in this particular instance that a 
certain case would come up. 

Commissioner Forbes. No; as a matter of fact it did not come up, 
although the Government, could have forced it to come up. 

The Chairman. It was expected that it would come up. 

Commissioner Forbes. Not necessarily. It was expected only by 
those who wanted to see it come up, not by anybody else. It might 
have come up. The Government could have forced it to. 

Mr. Olmsted. But it did not. 

Commissioner Forbes. No, sir. 

The Chairman. Do you think of anything else, Mr. Commissioner? 

Commissioner Forbes. No, sir. 

The Chairman. We are greatly obliged to you. 


AMENDMENT OF PORTO RICAN CIVIL GOVERNMENT 

ACT. 


Committee on Insular Affairs, 

House of Representatives, 

Friday , January 19 , 1906. 

STATEMENT OF ROBERT H. TODD, MAYOR OF SAN JUAN, PORTO 

RICO. 

The Chairman. The committee has before it this morning House 
bill 12076, entitled “A bill to amend an act approved April 12, 1900, 
entitled ‘An act to provide revenue and a civil government for Porto 
Rico, and for other purposes.’ ” We have with us Hon. Robert H. 
Todd, of San Juan, P. R., who desires to be heard upon this bill, 
and also upon conditions in Porto Rico. 

Please tell the committee your official position, Mr. Todd, and 
whom you represent here, and then proceed with your statement. 

Mr. Todd. I am the mayor of San Juan, the capital of the island of 
Porto Rico, and, together with Mayor Buso, I represent the League 
of Municipalities of Porto Rico, which was founded on the 25th day 
of July, 1905, at a meeting of delegates of 65 municipal councils out 
of the 66 councils into which the island is divided. 

This meeting was called together by the city council of San Juan, 
with the idea of discussing public matters and seeing if we could 
reach some means of checking the wide-spread sentiment of hostility 
against certain acts of the local administration in Porto Rico. This 
convention, among its acts, decided to address a memorial to the Con¬ 
gress of the United States asking for certain changes in our organic 
act, and Mayor Buso and myself are the bearers of this memorial. 
It was introduced in the House of Representatives by our commis¬ 
sioner, Mr. Larrinaga, on the 16th of this month, and in brief it only 
asks for the following changes: That instead of the executive council, 
which is our upper house in Porto Rico, we should have an elective 
senate, and that the heads of departments, who are to-day appointed 

41 



42 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

by the President of the United States, be appointed by the governor 
or Porto Eico, with the advise and consent of the local senate. 

Those two changes, we think, will satisfy the wishes of the entire 
island of Porto Eico, without distinction of political parties, and we 
think that the island has shown such progress in the seven years of 
American control that we can carry on the business of our island suc¬ 
cessfully. In asking for this change the Porto Eicans are not asking 
for anything which they did not have under the Spanish flag. 

The Chairman. Your lower house is already elective? 

Mr. Todd. Elected by the people; composed of 35 members. 

The Chairman. How many districts? 

Mr. Todd. Seven districts. 

The Chairman. Five from a district? 

Mr. Todd. Yes, sir. 

The Chairman. Making a lower house of 35? 

Mr. Todd. Thirty-five members, and the upper house is composed of 
11 members, and is called the executive council, and all the members of 
that, council are appointed by the President. The organic .act pro¬ 
vides that this executive council shall have at least 5 native Porto 
Eicans, and I may say that since 1900, when the civil government 
was established, this minimum of 5 has never been increased; so 
that the entire legislation, the entire control of the island, is put in 
the hands of the 6 American members of the executive council, who 
at the same time are heads of departments’. 

Mr. Page. Of what? 

Mr. Todd. The heads of the different departments. So that they 
have executive powers, and legislative powers, and if you take the 
case of the attorney-general, he also has judicial powers, because he 
appoints—at least he recommends the appointment of—judges and 
so forth, and is a sort of an adviser of the courts, so he has all those 
three powers. 

As I was saying, these changes asked by the Porto Eicans are 
nothing new. They had this same thing under the Spanish Govern¬ 
ment, if not more. I hold in my hand a translation of the constitu¬ 
tion establishing self-government in the islands of Cuba and Porto 
Eico, translated by the Division of Customs and Insular Affairs of 
the War Department August 18, 1899. This self-government was 
established in Porto Eico on November 25, 1897, and gave us two 
houses—a parliament composed of two houses—tjtie lower house and a 
majority of the upper house elected by the people, and this local par¬ 
liament had the power not only to enact laws affecting the local 
administration of the island, but also touching the tariff, as well as 
the right of making commercial treaties with foreign countries. The 
people of Porto Eico can not conceive that under the American flag 
they should have less than what they had under the Spanish flag. 

Mr. McKinlay. With the permission, of the chairman, I would 
like to ask you a question. You alluded to much discontent felt 
among certain classes of your people against the governing body. To 
what do you allude ? 

Mr. Todd. I am going to refer to that later. 

Mr. McKinlay. Very well. 

Mr. Todd. As I say, there are six American members of the execu¬ 
tive council, and those six members are the real executive council of 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 43 

Porto Rico. The legislature of Porto Rico will sometimes enact a 
law- 

Mr. Gilbert. Pardon me a minute; do not the other five members 
participate actively ? 

Mr. Todd. Yes, sir; those five participate. 

Mr. Gilbert. Are not close lines drawn between the appointees of 
the President and the natives on important questions? Do they 
divide on that line strictly ? 

Mr. Todd. Sometimes they do—on important matters affecting the 
island they do. 

As I was saying, the legislature will pass an act sometimes, and I 
will give you an illustration of that. We consider the appropriation 
act in Porto Rico just as binding as any other law, and whatever 
provisions are contained in that appropriation act we. think they are 
binding for everybody. Last year, I think it was in April or May, a 
month or two after the legislature had adjourned, every department 
of the island had been provided for with what we would call a 
paymaster, a man in charge of the disbursements of the office, and 
that was provided for in the appropriation act, with its salaries 
attached. In April or May the council met and decided to disregard 
the provisions of that appropriation act with regard to the disbursing 
officers, and created a central disbursing office, fixing the salaries of 
those officials, and doing away with the entire organization, as pro¬ 
vided for by the appropriation act. Against this action was the vote 
of the five Porto Ricans, but the six American members of the 
executive council put that so-called act into effect. 

Mr. Rucker. Could they pass the act without the concurrence of 
the lower house? 

Mr. Todd. They claim they can, but we claim they can not, because 
the legislative powers are only vested in both houses sitting in legis¬ 
lative assembly. But they claim that they can do that. I have here 
before me the organic act of Porto Rico, called generally the For- 
aker Act, which in section 18 establishes the executive council of 11 
members, 5 of whom at least, says the act, shall be native Porto 
Ricans. 

The Chairman. The members of the committee will find in the 
committee reports of 1900 and 1901, on page 389, a copy of the or¬ 
ganic act of Porto Rico. 

Mr. Todd. Section 22 of this same act says that “ the treasurer of 
Porto Rico shall collect and be the custodian of public funds, and 
shall disburse the same when appropriated by law on warrants signed 
by the governor,” etc. Now, Ave Porto Ricans interpret this section 
to mean that the treasurer of Porto Rico can not disburse any sum 
from the public funds except by law, and, of course, we know what a 
law is. In Porto Rico it must be enacted by a concurrence of both 
1 louses. The executive council—at least the^six American members 
of that council—and I am not referring to the present executive 
council only, but to every one that we have had—from the first one 
established in 1900, have always claimed and contended that they 
have the right of disbursing moneys without reference to the lower 
house. 

Mr. Page. On what do they base that? 



44 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS, 

Mr. Todd. On section 36, which says that “ the salaries of all offi¬ 
cials of Porto Rico not appointed by the President, including the 
deputies, assistants, and other help, shall be so and so, and shall be so 
paid out of the revenues of Porto Rico as the executive council shall 
from time to time determine, provided, however, that the salary of 
no officer shall be—aaid so on, the general provision of law following. 
They claim that by this section they have the right, even though the 
lower house should not concur in making a budget, an appropriation 
act, to go ahead with the administration of the government and dis¬ 
burse the moneys, just through this section 36. Since the first legis¬ 
lative assembly, of which I was a member, there have been clashes 
between the lower and the upper houses on this question, and, strange 
to say, the clash always came on account of the lower house always 
insisting on reducing the expenses of government and the upper 
house insisting on sustaining them, going so far in committee meet¬ 
ings as to tell the members of the lower house that they not only had 
the right—the executive council—of establishing what shall be ex¬ 
pended in Porto Rico, but if the lower house did not meet with their 
ideas they would have Congress enact the budget of Porto Rico. 

And whenever the lower house undertook to reduce salaries the 
clash has been greater, and the statement has always been made, 
once and again, at every session of the legislature, that the house of 
delegates had the right to cut down expenses in schools, roads, and so 
forth—public improvements—but that they had no authority what¬ 
ever in matters of salaries. Now, in opening my statement as to this 
ill feeling in Porto Rico as to certain acts of the executive council, 
with these few T references made regarding certain members of the 
upper house, I think the gentlemen of the committee will find them 
justified, without entering into any other details, which would be 
numerous if I were to commence to tell them. 

Mr. Rucker. This refers to salaries of all officers in Porto Rico 
not appointed by the President ? 

Mr. Todd. Meaning their help. 

Mr. Rucker. All officers not appointed by the President ? 

Mr. Todd. Yes, sir. That means the assistants in office—the depu¬ 
ties, etc. 

Mr. Crumpacker. Did you ever have an assembly down there 
under the Spanish authority of 1897 to which you referred? 

Mr. Todd. Yes, sir; we had one. It was in session on the 25th of 
Jilly, 1898, when the Americans landed at Guanica. 

Mr. Crumpacker. How long had it been in session, about? 

Mr. Larrinaga. If the Judge will allow me, I would like to make 
a short statement on that point, if the chair will allow me. 

Mr. Crumpacker. For information; yes, sir. 

The Chairman. Certainly. 

Mr. Larrinaga. That assembly has been in session several days, and 
besides that, we Porto Ricans for a good many years before that had 
a local legislature called the provincial deputation—the deputation 
provincial. That was elected by the people. 

Mr. Crumpacker. I wondered what authority your people had 
under the Spanish legislation. It could not have'been much, because 
they lost control very soon. 

Mr. Larrinaga. Does the gentleman wish me to furnish that infor¬ 
mation ? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 45 

The Chairman. Yes, sir. 

Mr. Larrinaga. From time immemorial we had representatives in 
the Spanish congress that were elected—four senators and sixteen rep¬ 
resentatives, as you call them here, and it was through them and 
through their work in that congress that Porto Rico in the course of 
many years obtained, one by one, all the rights and liberties that we 
thought we were entitled to. 

Now, for instance, they began by applying to Porto Rico the Span¬ 
ish constitution. That put all Porto Ricans on the same footing as 
the Spaniards and gave them the same protection of life and property 
and right of speech, freedom of the press, and so forth, that the 
Spanish people enjoyed under their constitution of 1867, which had 
enlarged the Spanish constitution framed at Cadiz at the beginning 
of the last century, in 1812. That constitution was extended to 
Porto Rico a good many years ago—as far back as the eighties. Be¬ 
sides the right to elect our representatives to the Spanish Cortes, and 
the extension of the constitution, we obtained through our represen¬ 
tatives there, the Spanish citizenship. The Porto Ricans thought 
that a good many other Spanish laws should apply in Porto Rico, 
and they obtained them. 

We thought we were entitled to have the same civil and criminal 
codes apply to Porto Rico, without discrimination between Spaniards 
and Porto Ricans, and we obtained them. Our representatives ob¬ 
tained also the passage of a law giving free trade to Porto Rico in 
ten years. Every year one-tenth part of the tariff was taken off, and, 
finally, when the home government was granted to Porto Rico, we 
were in the last year of that period, so that we could send all our 
products free to Spain; and we obtained, finally, free trade. 

The people had the practice of the people in electing our own law¬ 
makers. In 1873, for instance, when the republic was promulgated 
in Spain, it was promulgated in Porto Rico, and the whole set of laws 
enacted by that country were applied to Porto Rico; so much so that 
our delegation, or rather representatives, for they were full-fledged 
representatives as much as any of the peninsular ones. In 1873 the 
Spanish republicans joined with the Porto Ricans, because their views 
of democracy and liberty agreed with views of the Porto Ricans. 

And our representatives then saw an opportunity of doing some¬ 
thing that our people had been for a long time calling for, and had 
only been attained in part. That question was the abolition of slav¬ 
ery" We had been working in Congress, and we had only obtained 
measures tending to the gradual abolition of slavery. For instance, 
they stopped all kinds of African trade, and prohibited it entirely, 
and enforced it properly. 

Another act prohibited the new born to be slaves. Another law 
would limit the age of the slave—that is, that a slave of a certain age 
should be free. Another act would give the slave the right, by the 
payment of a small sum, to be free. 

Mr. Crumpacker. Your local legislature made these laws? 

Mr. Larrinaga. No, sir; the Spanish Cortes made them. 

Mr. Crumpacker. Let me ask you this general question: Did the 
people of Porto Rico enjoy the same political and civil rights and 
privileges- as people living in the provinces in the peninsula at the 
time of the American occupation ? 

Mr. Larrinaga. Every one. 


46 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Crumpacker. They were on the same footing, politically^, and 
on the same footing as the subjects of the Crown in the provinces in 
the peninsula ? 

Mr. Larrinaga. Yes, sir; the Spanish constitution had been on- 
tended fully to Porto Rico. To finish on that point of slavery I will 
tell you that our 15 members, backed by the Spanish republicans, 
passed a law, and slavery was abolished that same day, and the last 
clause of that law provided that act should be passed by cable, and 
the next day every slave arose a free man in Porto Rico. 

The Chairman. I think we will have to let Mayor Todd proceed 
with his statement, now. We are very much obliged to you, indeed. 

Mr. Todd. A very few 7 w ords more. In referring to the acts of the 
executive council of Porto Rico, I may say that this ill feeling pre¬ 
vailing in the island is due not to the executive council. It is an 
injustice to put the name of the executive council in that connection, 
because that w T ould include the five Porto Rican members. But this 
feeling is against certain acts of what is called in Porto Rico the cab¬ 
inet of the governor, something wdiich is not in our organic act at all, 
but w T hich was established by the first civil governor of Porto Rico, 
Mr. Allen, and referred to in his first annual report. 

So it is made official, although the act itself does not refer to this 
cabinet. The first annual report of the first civil governor mentions 
this cabinet, and every other governor after him has continued that 
organization. This cabinet is composed of the six American mem¬ 
bers, w 7 ho hold their sessions in the office of the governor twice a week. 
Now, section 26 of the organic act says that the other five members 
of the executive council to be appointed, as herein provided, shall 
attend all meetings of the executive council, and participate in all 
business of every character that may be transacted by it, and they 
shall receive as compensation—and so forth. If this is not a viola¬ 
tion of this section I do not know 7 w 7 hat w 7 ould be. To prove to this 
committee that these native members have never attended these 
meetings of the so-called cabinet, I have brought with me two letters 
from two ex-members of the executive council during the first four 
years of civil government. 

Mr. Gilbert. Are they prohibited from attending? Why do they 
not attend? ' 

Mr. Todd. They are not invited. 

Mr. Page. Would they be received if they were to attend? Would 
they be received into the cabinet meeting? 

Mr. Todd. That is a question I can not answ er. 

Mr. Larrinaga. It is a pretty hard proposition to answer. 

Mr. Todd. I w ould like to read these letters. They are very short. 
I addressed a letter to each of these gentlemen, asking them about this 
question, and these letters are in answ 7 er to my letters. This gentle¬ 
man Avho wrote this first letter was a member of the executive council 
during the first four years of civil government, and to-day is the 
speaker of the house of delegates—that is the lower house of the 
legislative assembty. He says: 

I never attended the meetings of the so-called cabinet of the governor, be¬ 
cause I was never invited to attend same; and during the four years of my 
incumbency as a member of the council I never heard that my coileagues, the 
native members of the council, w 7 ere ever invited to attend. 

I was never invited, and therefore never attended any meeting of the execu¬ 
tive council in the presence of the governor, and only once did I attend a meet- 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 47 


ing of the executive council outside the regular ones, but not in the presence of 
the governor. 

I was never consulted about any matter of interest whatever by either Allen 
or Hunt, who were the governors during my time as a member of the council. 

I only have to add that at a meeting of the executive council, which I 
attended as a member of such body, I asked what was the standing (or status) 
of the native members of the council, as such members, and I was answered 
by the Hon. Mr. Hollander that it was that of mere figureheads. 

I remain, with due respect, 

(Signed) Rosendo Matienzo Cintron. 


The other letter I have here is from Doctor Brioso. The chairman 
knows the gentleman. This letter reads as follows: 

With great pleasure I answer your letter dated the 2Gth instant, wherein 
you are pleased enough to make the two following questions: 

“ 1. Would you be willing to tell me if during the time when you were a mem¬ 
ber of the executive council you attended, or were you invited to attend, any 
meeting of the executive council, with or without the presence of the governor, 
outside of the public meetings which said body holds? 

“ 2. Ill your capacity as councilman were you ever consulted by Governors 
Allen, Hunt, and Winthrop regarding the form and manner of expending said 
money: did you attend, or were you ever invited to attend, any meeting with 
your fellow eouncilmen wherein the form and manner of expending said money 
was discussed? (Referring to the sum which Congress refunded to Porto Rico 
from customs collected on importations up to January 1, 1900.)” 

This was the sum returned to Porto Rico from customs dues col¬ 
lected on merchandise coming to the United States from Porto Rico 
which were placed in the hands of the governor of Porto Rico to be 
applied to public improvement, arid I asked that question in my let¬ 
ter because I knew that the five native members of the executive 
council were never consulted as to the manner and form of expending 
that money. 

The letter continues: 


Both questions can be answered with one single word: “ Never.” Although 
this word is very affirmative, it shall be more so when I add that during the 
four years of my incumbency as councilman I only attended to the business of 
the executive council in its executive and legislative meetings with the presi¬ 
dent of said body in the chair. 

The expenditure of the moneys deriving from customs, ceded by Congress to 
the government of Porto Rico, was not submitted to the initiative and consid¬ 
eration of the executive council. As far as I know, such distribution was made 
by the governor and the heads of departments in cabinet meetings held weekly. 

In this matter I have had no other intervention as councilman than any 
other influential citizens near the administration. 

I think that with the foregoing I have faithfully interpreted your wishes in 
making the two questions as above, and I will be pleased if, in setting forth the 


truth, you are satisfied. 
Respectfully, 


(Signed) J. Gomez Brioso. 


The Chairman. Did you say that the sum expended was approxi¬ 
mately $2,000,000 ? 

Mr. Todd. Over $2,000,000. I think there is $100,000 of that sum 
left in the treasury of Porto Rico. I must say, in regard to the ex¬ 
penditure of this money, that no criticism is made as to the way of 
expending this money. It has all been employed in building school 
houses and public roads. What we complain of, what the people 
of Porto Rico are complaining of, is that the judgment and discre¬ 
tion as to building a road should be placed in the hands of Ameri¬ 
cans, and not of natives. It happens that a gentleman appointed 
as a member of the council would reach Porto Rico on a steamer, say, 


48 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

this morning at 8 o'clock. If it happens to be a Friday, and this is 
the day the steamers from New York arrive in Porto "Rico, he will 
attend one of these cabinet meetings at 11 o’clock that same morning, 
and decide, probably, what road is to be constructed with that money; 
and yet the five Porto Rican members of the council, who know more 
about Porto Rico and its customs and its needs, are not consulted 
at all. 

And not only would that new member do that in the cabinet meet¬ 
ing,.but if there should be a public meeting of the executive council 
he would take his seat in the council and decide with his vote im¬ 
portant questions on matters affecting Porto Rico, without knowing 
the language, the customs, or anything of a country of 1,000,000 
inhabitants, as Porto Rico. We think that those are reasons why this 
petition of the municipalities of Porto Rico should be considered by 
Congress, and our Commissioner, Mr. Larrinaga, has embodied in a 
bill, which he has introduced in the House on the 16th, these wishes of 
the municipalities of Porto Rico, which represent the wishes of the 
whole people. 

Mr. McKinlay. The American commissioners are all residents of 
Porto Rico? 

Mr. Todd. You mean the six Americans? 

Mr. McKinlay. Yes. 

Mr. Todd. No, sir. 

Mr. McKinlay. Where do they reside, principally? 

Mr. Todd. In Ohio, in Iowa, in Texas. 

Mr. McKinlay. You say they go from here over there to attend a 
cabinet meeting? 

Mr. Todd. The President appoints, for instance, the commissioner 
of the interior. . 

Mr. McKinlay. They reside there during their term of office? 

Mr. Todd. Yes, sir; they do; but they come over here every three 
or four months to spend a little vacation, and then go back. 

Mr. McKinlay. They are supposed to reside there? 

Mr. Todd. Yes, sir; they are supposed to reside there. 

Mr. McKinlay. You alluded to the fact that they come to San 
Juan on a steamer in the morning. 

Mr. Todd. Yes, sir; just appointed. 

Mr. McKinlay. And attend a cabinet meeting at 11 o’clock? 

Mr. Todd. Yes, sir; just appointed. 

Mr. McKinlay. Just appointed? 

Mr. Todd. I am referring to that. 

Mr. McKinlay. That is a figurative manner of speaking of it. I 
thought they were perhaps living in different parts of the island and 
came to the capital to attend these meetings. 

Mr. Todd. No, sir. 

Mr. McKinlay. You are using figurative language? 

Mr. Todd. Yes, sir. The commissioner of the interior is a new 
man, and he got to Porto Rico at 8 o’clock in the morning and at¬ 
tended a meeting of the cabinet at 11 o’clock. I do not know what 
was done at that meeting, but every measure of the executive council 
is first discussed and decided in these cabinet meetings. 

Mr. Kinkaid. Was there any similar instance to that? 

Mr. Todd. There was the case of the attorney-general—the previous 
attorney-general; the present one has just been confirmed by the 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 49 

Senate. He got to Porto Pico last evening, for instance, and the 
next day he took his seat in the executive council, which was in 
legislative session. There was a matter pending in the council, and 
I am going to refer to it without any feeling just now about it. It 
was a political matter. It was the changing of the coat of arms and 
great seal of Porto Rico. This measure was introduced first by 
the secretary of Porto Rico, Mr. Post, and it was to change back to 
the old Spanish coat of arms and seal instead of the one which had 
been adopted in 1901. The Porto Rican members of the council 
were divided on the question, and the American members were also 
divided. 

There were ten members of the council, five for and five against 
this measure, and of course the measure was lost in that situation, 
but this attorney-general came in, found out what was going on,' and 
as he did not care one way or the other, he decided that measure 
with his vote. He decided it right there. 

The Chairman. Mr. Mayor, let me ask you this question. So, by 
that vote of that man, the attorney-general, the great seal of Porto 
Rico was changed from the one indicative of American sovereignty 
back to the old seal indicative of Spanish sovereignty ? 

Mr. Todd. Yes, sir. 

The Chairman. And that is the seal to-day ? 

Mr. Todd. That is the seal to-day; that is on record. I am only 
saying what is on record. 

Mr. Rucker. How did the native members of the council vote on 
that? 

Mr. Todd. They divided. That was a political matter, and they 
were divided. 

Mr. Rucker. Three and two ? 

Mr. Todd. Yes, sir; three and two. 

Mr. Rucker. Which way were they joined? 

Mr. Todd. There are two Republicans, one Unionist, and two Inde¬ 
pendents. Two Republicans and one Independent voted against the 
measure, and one Unionist and the other Independent voted for the 
measure. 

Mr. Rucker. The majority voted against it? 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. It seems as though you ought to have more to 
say in regard to the expenditure of the money that you contribute 
and as to your own affairs. That is the sum and substance of what 
you say. * 

Mr. Todd. Yes, sir; that is it. 

Mr. Crumpacker. That is a pretty good way to feel about it, too. 
I understand from the memorial and what you say, that you are 
willing that the heads of the executive departments in the island 
shall be appointed by the governor ? 

Mr. Todd. By the governor. 

Mr. Crumpacker. And confirmed by the Porto Rican senate? 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. But you want the legislative functions-- 

Mr. Todd. Entirely separate. 

Mr. Crumpacker. Entirely separate; and to be in the senate? 

Mr. Todd. Yes, sir. 



50 hearing before house committee on insular affairs. 

Mr. Crumpacker. And the lower house, both bodies to be elective, 
purely ? 

Mr. Todd. Elected; yes, sir. 

Mr. Crumpacker. What does the law provide as to the negative 
or veto of the governor on legislation ? 

Mr. Todd. There is the general provision of American legislatures. 
The legislature can vote- 

Mr. Crumpacker. And pass it by two-thirds? 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. And they qualify the negative that the Presi¬ 
dent has? 

Mr. Todd. Yes, sir; Congress. 

Mr. Crumpacker. Congress reserves that right. 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. It is not an absolute veto? 

Mr. Todd. No, sir; but the Porto Rico act also provides that Con¬ 
gress has the power of repealing any laAv in Porto Rico. 

Mr. Hubbard. You reserve that in your bill? 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. This is a very important bill. 

Mr. Todd. There is only one section I have to oppose in this bill, 
and I have told the Commissioner about it. That is section G, which 
reads as follows: 

Sec. 6. That section twenty-eight is hereby amended so as to read as follows: 

“ Sec. 28. That for the purposes of such elections Porto Rico shall be divided 
by the legislative assembly into seven districts, composed of contiguous terri¬ 
tory and as nearly equal as may be in population, and each district shall be en¬ 
titled to two members in the senate and five members of the house of delegates.” 

Now, my opposition to that section is only based on the following, 
that this section 28 of the Foraker Act has already taken effect. Sec¬ 
tion 28 reads: 

Sec. 28. That for the purposes of such elections Porto Rico shall be divided by 
the legislative assembly into seven districts, composed of contiguous territory, 
and as nearly equal as may be in population, and each district shall be entitled 
to five members of the house of delegates. 

This was done in June, 1900, when the executive council was organ¬ 
ized. It had to prepare for the first election of the house of dele¬ 
gates, and of course it made that division of the island into seven 
districts, and I claim that there is no reason why we should divide it 
again, unless the local legislature should see fit to do so in the future. 

Mr. Rucker. This is not in the old act? 

Mr. Todd. No, sir; it is not. 

Mr. Jones. Why can not the legislative assembly just confirm this 
present division? You are not obliged to change the territorial 
divisions at all. 

Mr. Rucker. I take it that this section amending section 28 of the 
Foraker Act corresponds exactly with the Foraker Act, except that it 
puts in this provision as to the members of the senate. • 

Mr. Todd. Yes, sir. 

Mr. Jones. His objection is that this section would make it im¬ 
perative to redistrict, and he does not want to interfere with the dis¬ 
tricts as they are now. They could simply redistrict by declaring 
that the districts as they now exist should remain so. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 51 

Mr. Rucker. Let me suggest, Mr. Jones, this, if you please. Sec¬ 
tion 6 says that section 28 is amended “as follows.” Now, upon a 
reading of it and a comparison with the statute sought to be amended, 
it is apparent on such inspection that the only change is to insert this 
provision as to two members of the senate, so that it does not consti¬ 
tute a redistricting, so far as I can see. 

Mr. Todd. It says: “ Shall be divided by the legislative assembly 
into seven districts.” The legislative assembly “ shall do ” this. 
That is one of the duties imposed upon them. It might give an op¬ 
portunity for gerrymandering. 

The Chairman. Are the present districts satisfactory as to popu¬ 
lation, and so forth? Are they fairly satisfactory, or not? 

Mr. Todd. As you well know, Mr. Chairman, in every country 
there are matters of opinion wherever there are different political 
parties, and one of the two parties in Porto Rico is not satisfied with 
that division, and the other is satisfied, of course. 

The Chairman. This division, or apportionment, was made before 
the extreme party alignment now existing down there? That did 
not develop until after that apportionment was made, did it? 

Mr. Todd. Those parties existed as political parties; those two. 

Mr. Hubbard. What is the main difference between those parties in 
political belief? 

Mr. Todd. None whatever, speaking from up here. You would not 
understand it if I should explain, so that I had better say there is 
none. 

Mr. Larrinaga. Mr. Chairman, may I be allowed to say a word 
about that section? 

The Chairman. Certainly. 

Mr. Larrinaga. I am not drawn to this because of the bearirig that 
this section 28 may have on the political affairs of Porto Rico, but I 
wish to tell Mayor Todd that I left the section because I thought that 
dividing the island into districts went by right to the legislative 
assembly, and perhaps in future it might be convenient to change it. 

I have been sent here as a commissioner, and of course all the 
gentlemen here know that it is my party that won the elections. 
And it might be suggested that if we won the election, why should 
we wish to change the districts? But it seems to me that in framing 
this act it would look small to go and provide for that particular 
point. And I thought it was more proper to leave the section as it 
reads. 

We do not know but that thirty years from now the people may find 
it convenient to change that division of the island, and we should 
be coming here to Congress to have our organic act amended. It 
was with no intention, Mayor Todd may be sure of that, of gaining 
any political advantage, that I did this. I will tell the committee 
honestly and fairly, it was a friend of Mr. Todd that made the 
present division of the island into districts. We accepted it more 
or Jess reluctantly. I am sorry that the mayor introduced the word 
“ gerrymandering.” 

The Chairman. We all know what that is. 

Mr. Larrinaga. We have been taught by the friends of Mr. Todd 
what it is, and a fine piece of work it was, their first lesson to us. 

Mr. Rucker. You could not get your legislative council now to 
change it? 


52 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Padgett. It is fixed by law. 

Mr. Crumfacker. What is the objection to incorporating a pro¬ 
vision authorizing the council to reapportion once in ten years? 

Mr. Todd. None, sir. 

Mr. Crumpacker. Then if there are no changes made tfrey can 
redeclare the old districts, and of course if changes of boundaries 
are required they can make them, but it ought not to be done oftener 
than once in ten years, and that will take that question out of local 
politics. 

Mr. Jones. You can add to this section a provision to the effect 
that changes should not be made oftener than once in ten years. 

Mr. Crumpacker. I think I can understand that if the Porto 
Picans in their politics have not got to the subject of gerrymandering 
yet, they will soon if they come to Washington very often. 

Mr. Larrinaga. We had a very good teacher there once. 

Mr. Todd. If you will allow me, I will proceed. 

The Chairman. Proceed, Mr. Mayor. 

Mr. Todd. These remarks of mine will probably go down to Porto 
Pico, and I want to explain a certain word I said. I think it was 
Mr. Hubbard who asked me what was the difference between the two 
parties, and I said none, because if I should explain it you would 
think there is none. But I shall have to explain what is the real 
difference. Now, there are two political parties in Porto Pico—one 
called the Republican and the other the Unionists. 

The Republican party has in its platform the aspiration that 
Porto Rico be ultimately admitted as a State in the Union. That is 
the basis of our political ambition, and no other. We do not put in 
anything else. The Unionists have in their platform that ambition 
also, as well as other ambitions. They say that as the treaty of Paris 
left in the hands of Congress the ultimate status of Porto Rico, they 
would accept anything which Congress would see fit to enact for 
Porto Rico. If Congress should see fit to make Porto Rico a colony, 
the same as the English colonies, they would accept it. If Congress 
saw fit to make Porto Rico a State, they would accept that also, and 
if Congress saw fit to make it an independent nation, they would 
accept that also. That is the real difference, but it is only on paper. 
When it comes to practice, we find that there is no difference. 

For instance, when the message of the President of the United 
States was cabled over to Porto Rico, I mean that part regarding 
Porto Rico, both parties, through their executive committees, met to 
discuss and decide about that part of the message of the President; 
and if you could see what was the result in both parties, you would 
find that both parties accepted the utterances of the President with 
applause and said they were satisfied. And with no exception at 
all both parties acknowledged the same thing. There were two 
points in that messa'ge I may note specially. The first was that the 
legislative assembly of Porto Rico should meet once every two years. 
That is not acceptable to anybody in Porto Rico. 

The Chairman. There is another point, that of the executive 
council ? 

Mr. Todd. Yes, sir. 

The President said that he did not see why the executive council 
should be changed, because investors and property owners of Porto 
Rico were satisfied. Those are the two points which were objected 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 53 

to. The Porto Ricans accepted all other provisions, and I under¬ 
stand that the Unionist party has decided the same as the Republican 
party in regard to the 500-acre question—that is, that they do not see 
why that clause should be changed; that it should be left just as it 
is now. So that although the two political parties in their platforms 
differ, when it comes to practice they are just the same. 

The Chairman. The two parties agree in the demand for an elec¬ 
tive upper house ? 

Mr. Todd. Yes, sir. 

The Chairman. Do I understand you to say that you are in sub¬ 
stantial agreement that the law, which we passed, prohibiting the 
future sale of more than 500 acres of agricultural lands to one pur¬ 
chaser, shall stand ? 

Mr. Todd. Yes, sir; that is the sentiment of the island. No harm 
has come to Porto Rico for that reason. If anything, good has re¬ 
sulted. 

Mr. Jones. Have you ever had your attention called to an article 
written by the late General Roy Stone, criticising that provision of 
the law? 

Mr. Todd. Yes, sir. 

Mr. Jones. You do not agree with the statements made by him? 

Mr. Todd. No, sir. 

Mr. Rucker. Is that the provision that no man shall have more 
than 500 acres of agricultural land? 

Mr. Todd. Yes, sir. Now, whenever any corporation wanted to 
do business in Porto Rico it did not find any difficulty on account of 
that prohibition. You will find different sugar estates, controlled 
by American capital, with extensive sugar cane land, and yet there is 
nothing to hinder them in getting all the cane they want to plant. 

Mr. Jones. And it does not keep capital out of your island? 

Mr. Todd. I do not think so. We do not believe that. 

Mr. Kinkaid. Do any of these operators in producing cane, grow¬ 
ing cane, manufacturing sugar, control or operate more than 500 
acre's now ? 

Mr. Todd. I will answer that by saying that although the pro¬ 
vision is in that act against a corporation holding more than 500 
acres of land, there is no clause punishing this corporation for hold¬ 
ing more than 500 acres. But I think they have got around it by 
forming different companies. There will be a company to plant 
land, this land being owned by some individual, and that company 
will give a power of attorney, for instance, to the other company 
which is grinding the cane to develop the cane fields. 

The Chairman. In conversation you mentioned an incident that 
illustrates the methods of the executive council in doing business. 
I wish you would repeat that to the committee. You told me about 
a man whom the executive council selected as their agent to take 
charge of the coffee business in New York City. 

Mr. Todd. Yes, sir. 

The Chairman. Will you please tell the committee about that, the 
importance of it, and what was done ? 

Mr. Todd. I will. The committee of course knows that Porto 
Rico is an agricultural country, and that one of its principle staples 
is coffee. With the change of sovereignty we lost our European mar¬ 
kets, and we did not gain the markets of the United States. When 


54 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

the cyclone of 1899 came about it destroyed mostly all the coffee, and 
that was a terrible blow to the coffee industry. Well, the legislature 
since its first session tried to issue bonds for $5,000,000 to set up 
either a bank or to loan this money to the different banks in the 
island with the provision that they should loan this money to the 
agricultural cultivators of coffee to bring up their crops. We never 
could succeed in making the executive council believe in this scheme. 

We tried also to enact a law establishing an agency in New York 
for the purpose of introducing our coffee, so as to make it known, 
because it is very little known in the United States, and after a few 
attempts, which were never accepted by the executive council, at last 
last year they agreed and enacted a law setting aside a certain sum—* 
I do not remember how much. Do you remember the sum, Mr. 
Larrinaga ? 

Mr. Larrinaga. $12,500, 

Mr. Todd. Setting aside $12,500 for the establishment of this 
agency in New York, and of course leaving in the hands of the gov¬ 
ernor the appointing of a proper person, who should be a man who 
knew about our coffee and who had the interest of the island at 
heart. What the chairman was mentioning is that the governor saw 
fit to appoint a man who was employed in the office of the secre¬ 
tary. We do not think he ever knew anything about coffee. 

The Chairman. In what capacity was he employed there? He 
was a clerk, was he ? 

Mr. Todd. He was a clerk in the secretary’s office. 

Mr. Smith. How long had this man been in Porto Rico, do you 
know ? 

Mr. Todd. Two or three years, I think, he had been there. 

Mr. Larrinaga. No; about one year. 

Mr. Todd. One year, was it ? 

The Chairman. All the time as a clerk in the secretary’s office? 

Mr. Todd. Yes, sir; all the time in the secretary’s office. He is a 
good man and a nice gentleman, but I do not think he knew anything 
about coffee. 

Mr. Webber. What were his duties to be at the New York port? 

Mr. Todd. He is supposed to influence coffee importers in New 
York to buy Porto Rican coffee, and of course to introduce it. 

Mr. Webber. It requires a man who has had experience in coffee 
raising—an expert, you think? 

Mr. Todd. I do not think he is an expert. 

Mr. Webber. I say it requires that he should be such a man? 

Mr. Todd. Yes, sir; and I claim that we have such men down there 
in Porto Rico, men who have been in business in New York, and have 
been in the coffee business, and know all about it. 

Thereupon, at 12 o’clock m., the committee adjourned until to- 
morroAv, January 20, 1900, at 10.30 o’clock a. m. 


AMENDMENT OF PORTO RICAN CIVIL GOVERNMENT 

ACT. 


Committee on Insular Affairs, 

House of Representatives, 

Saturday , January 20, 1906. 

The committee met at 10.30 o’clock a. m., Hon. Henry Allen Cooper 
(chairman) in the chair. 

The Chairman. I think, in view of the number of new members on 
this committee, that it would be well to interrupt the statement of 
Mayor Todd at this point, and, before he proceeds, to have Mr. Lar- 
rinaga, the Delegate from Porto Rico, who is a civil engineer, describe 
the topography of the island and its general physical features and 
characteristics, illustrating his remarks by the map. 

STATEMENT OF HON. TTJLIO LARRINAGA, RESIDENT COMMIS¬ 
SIONER IN CONGRESS FROM THE ISLAND OF PORTO RICO. 

Mr. Larrinaga. As you will see, Mr. Chairman and gentlemen, the 
island of Porto Rico, which was ceded by the treaty of Paris, includes 
also some islands about here, called the Vieques and Culebra. 

The Chairman. How far is that east of Porto Rico ? 

Mr. Larrinaga. A sailing schooner goes in three hours from there 
to Vieques. 

The Chairman. About how many miles is it ? 

Mr. Larrinaga. That would make it no more than 10 or 12 miles. 
Beyond that is the island of Culebra, which is now used as a station 
where the American war vessels go for a rendezvous. 

The Chairman. What are the dimensions of the island ? 

Mr. Larrinaga. Porto Rico contains 3,600 square miles. Vieques 
is one-fiftieth part of that, so that it is not more than 60 or 70 square 
miles. Culebra, north of Vieques there, is about one-third the area of 
Vieques, and it is very interesting to you, because it has a beautiful 
harbor and is a station for the war ships; Avhere they stop, and from 
there they run to San Juan. San Juan is a good harbor, but it is 
not overclean. 

The Chairman. What is the population of San Juan? 

Mr. Larrinaga. Thirty-six thousand, by the last census. As you 
see, the island of Porto Rico is very nearly rectangular, being 90 
miles by 40 miles, and the topography is very peculiar. There is a 
range of mountains going from west to east, and here branching a 
little to the south and a little to the north [indicating on map]. This 
range of mountains forms the backbone of the island, so to speak. 

The Chairman. It is almost in the center of the island ? 

Mr. Larrinaga. It runs almost in the center of the island, from 
east to west. In that broken,, mountainous part of the island is where 
the coffee and the greater part of the tobacco is produced. 

Tobacco is also produced in this lower land and in the smaller 
valleys between those mountains, but the coffee is produced wholly in 
the mountains: while the lands are level around the north, west, and 
’ 55 



56 HEARING BEE ORE HOUSE COMMITTEE ON INSULAR AEEAIRS. 

south coasts and part of the east coast. There is where the sugar is 
produced. i 

Mr. Gilbert. Are there forests up in the mountains? Are there 
any valuable forests? 

Mr. Larrinaga. Well, yes. Not much now. They have been very 
much cut down to plant coffee, but there is some very beautiful 
hard-wood timber there. 

Mr. Gilbert. What are those woods? 

Mr. Larrinaga. Lignum vitae, cedar, ironwood, and a good many 
varieties valuable for construction. The Spanish navy used to take 
all the hard timber, used in old times when ships were built of wood, 
from the northern part of Porto Rico, Manati district. 

The Chairman. Right there, will you not tell about the coffee pro¬ 
duction ? It requires shade trees, does it not ? 

Mr. Larrinaga. Yes, sir. All that mountainous part of the island 
where the coffee is produced is covered largely by larger trees; those 
trees that are not a very strong kind of wood, not a hard kind of 
wood. Those trees are planted to shade the coffee. Coffee, as we 
think there—at least experience has proved it so—can not be pro¬ 
duced of a fine quality unless it is shaded by larger trees. So that 
when there is a cyclone the larger trees are thrown on top of the 
coffee trees and nearly kill them. Those trees are not of a strong 
nature, and are easily thrown down. That is what happened in 1899, 
when the great cyclone passed over the island. All the coffee is pro¬ 
duced in these higher parts of the island, and is of very superior 
quality, and that is the reason why it is so appreciated in Europe—in 
France, Spain, and Italy; and that was what made the wealth of the 
country before. Because of its high quality, coffee was very well 
paid for. 

Even to-day the price at which it is sold in Europe is very high. 
But instead of coming back to Porto Rico, the money that is paid for 
it now remains in the treasuries of those countries, in payment of 
duties, because they retaliate against the Dingley tariff; we now have 
against them instead of the treaties that Spain had with those nations, 
to allow them to send their products at a very low rate in the tariff 
into Porto Rico, in return for which they allowed the Porto Rican 
coffee to go into their countries by the payment of a small duty. 
That is wliat has caused the great drawback in our financial and 
economic conditions in the island. Now, we can not sell our coffee in 
France, Italy, or Spain, because, instead of getting for a pound of 
coffee 25, 30, or 35 cents (wholesale price), as we did then, we have to 
go and sell it there at $8 or $9 a quintal, which is 8 or 9 cents a pound. 
So that with the high duties they pay the public there pays the same 
high price that they paid before. 

But it makes no difference to us now whether we send our coffee 
there or send it to New York to compete with Rio coffee. And 
that is what we are doing now. Rio coffee in Brazil, in the province 
of Sao Paulo and the Cantagallo and other flat land districts, is pro¬ 
duced in high table lands, because good coffee is only abundantly pro¬ 
duced at a certain height above the level of the sea, and in Brazil 
they have high plateaus, as they call them. 

Mr. Gilbert. So that the advantage over the Brazilian coffee in 
the port of New York is- 

Mr. Larrinaga. None whatever. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 57 

The Chairman. There is no tariff on coffee. 

Mr. Larrinaga. There is no tariff on coffee. Coffee was put on the 
free list in 1873, if I recollect right. 

Mr. Gilbert. I understand; but there is a difference in the expense 
of transportation from Rio de Janeiro to New York that would give 
you that advantage. 

Mr. Larrinaga. Which advantage? 

Mr. Gilbert. The transportation advantage. 

Mr. Larrinaga. The difference in transportation is very little. I 
will explain it to you. Coffee is a very costly article, not like sugar, 
which sells for three and four dollars a quintal, or 3 to 4 cents a 
pound; but it sells at 8 or 9 cents a pound, so that on these vessels 
coming from Brazil the difference in freight is a trifle; and against 
that we have this, that the coffee, as I was telling you, in Brazil is 
produced on large plateaus high enough above the level of the sea to 
give them abundant crops, where it is easy to cultivate. 

It is actually raked in and treated by machinery; it is dried by 
steam and treated by artificial implements, while our berries in Porto 
Rico have to be picked one by one. The men, women, and children 
go over those rocks picking the berries one by one. So that it is 
more costly, and when the Brazilian producer is selling in New York 
at a profit for $7 a quintal, or 7 cents a pound, he is making money, 
although he pays an export duty to its Government, while we can not 
produce it at that cheap rate. And that is our contention. 

Mr. Kinkaid. But yours is of a superior quality? 

Mr. Larrinaga. Oh, yes. The French, Italians, and Spaniards 
are coffee drinking peoples, and not tea drinkers, and yet we compete 
there very favorably with Mocha and Java. When you go into a 
restaurant in Paris or anywhere in those countries and you get an 
after-dinner coffee, a little cup, no more than three or four table- 
spoonfuls ? and you pay a franc for it, the probabilities are that you 
are drinking Porto Rican coffee. 

Mr. Gilbert. That is news to me. 

Mr. Larrinaga. That commission man or agent, about whom Mayor 
Todd explained to you yesterday, was sent to New York for the pur¬ 
pose of presenting the Porto Rican coffee to the attention of the 
people of this country. 

Mr. Gilbert. You do not mean to say that the Porto Rican coffee 
occupies a higher place in the market generally than the Java? 

Mr. Larrinaga. In Europe it does. You have nothing to do but 
ask for the reports of the European markets, and you will see how 
Porto Rican coffee sells—at the wholesale price 30 and 32 cents. 

Mr. Gilbert. How much is Mocha ? 

Mr. Larrinaga. I could not tell that. But Mocha does not sell 
much higher than our coffee. The Rio coffee they would not think 
of drinking in any first-class place. 

Mr. Crumpacker. The mountains are fertile, are they, clear to the 
summits ? 

Mr. Larrinaga.. Clear at their summits. Even in those places 
where you would think, from the bare rocks, that nothing would 
grow, coffee and oranges are produced. We do not cultivate oranges; 
they grow wild, and according to the American experts Porto Rican 
oranges are as good as the best you can get. We do not cultivate 
them there on account of the cost of transportation. When a quintal 


58 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

of coffee goes for 30 or 40 cents to the ports, 100 pounds of oranges 
brings so much lower price that it does not pay. 

Mr. Kinkaid. A quintal is 100 pounds ? 

Mr. Larrinaga. Yes, sir. 

Mr. Page. What quantity of coffee is exported.from the islands? 

Mr. Larrinaga. I suppose we are exporting seventeen million 
pounds. We exported nearly four times that amount. 

Mr. Crumpacker. Have the coffee plantations been pretty generally 
restored since that terrible storm in 1899 ? 

Mr. Larrinaga. No, sir. Let me tell you a very important point 
about that. The coffee land in Porto Rico was mostly owned by 
small farmers. There were some large plantations, but not very 
large, which produced 4,000 or 5,000 quintals. But most of that land 
was distributed among many thousands of small plantations that 
produced a few quintals each. And that was one of the most beautiful 
features of our social condition in that interior part of the island. 
And unfortunately that has been disappearing, and we Porto Ricans 
think that the executive council is to be blamed for that state of 
affairs. The Porto Rican people are rather improvident, we admit. 

They had good crops before and, with the high prices of their 
staple, they had plenty of money and credit in the banks, atnd they 
were given lavishly the money to work their farms, so that every 
year they spent heavity, and many of them had their property mort¬ 
gaged when the first cyclone came. I do not want to hurt anybody’s 
feelings, but our people called the Dingley tariff “ the second cyclone.” 
When the first cyclone came and smashed all the property in coffee, 
those people could not find any more credit, no more money to rebuild, 
to cut away the fallen trees, and to carry them away and replant the 
coffee trees, and take care of the crops, and rebuild the houses and 
sheds Avhere the coffee is prepared. They could not get the necessary 
money, not only because the crop had been reduced to about one-fifth 
part of the original production, but mainly because the value of that 
small production had been reduced to one-fourth of the original 
value. 

While coffee sold, as I have told you, at 25 or 30 cents a pound in 
Europe, it has now to be brought to New York to compete with the 
Rio coffee at an average price of eight or nine dollars a quintal. 
The price has increased some, and sells at eight or nine cents a pound, 
and of course the planters lost their credit. We tried in our house 
of delegates to pass a bill to help those people. There have been 
some such measures passed on a large scale every time that we had a 
cyclone. Unfortunately we have a cyclone every twelve or fifteen 
years. These cyclones are formed near the mouth of the Amazon 
River, and they come over this way, and sweep over the West Indies, 
and sometimes they strike the south coast of the United States, of 
which you have an instance in the disaster at Galveston, and several 
in Florida. 

But they have never been a hindrance to the wealth of the country, 
because the Government, more or less, always came to the rescue, and 
Porto Rico is fertile. It has only been a matter of a year or two for 
the island to recover, and the next year after a cyclone you would 
find no traces of it. But this time we could not do that, although the 
lower house, as I said before—the house of delegates, elected by the 
people—undertook to come to the rescue, and make a loan which we 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 59 

knew would be quickly repaid, but that measure was opposed by 
executive council and it failed. Porto Rico has always been a money- 
lending country. Several times we have loaned money to the Central 
Government. 

The Chairman. You mean to the Government of Spain? 

Mr. Larrinaga. Yes, sir. 

Several times we have loaned money to San Domingo. In the 
sixties, I believe, we loaned money to San Domingo when it was 
under the Spanish rule. Cuba owes two and a half millions to Porto 
Rico to-day. We will never get it back, I suppose. But it is true 
that Porto Rico has always been a money-lending country. In the 
year 1873, as Mayor Todd told you, we had our representatives in the 
Spanish Congress, or Cortez, as they are called, and our own repre¬ 
sentatives, the slaveholders of Porto Rico, obtained a law from the 
Spanish Congress abolishing slavery in one day. And we made a loan 
and paid the slave owners every cent for their slaves, $14,000,000, 
capital and interest, and the next day the slaves went to work and 
the next crop Avas one of our best crops. When the cholera in 1855 
swept the whole of Europe and passed through America and ravaged 
Porto Rico, it was a matter of one crop to recover, as the price of 
sugar Avent up just on that account. 

Mr. Gilbert. What was the average compensation for slaves ? 

Mr. Larrinaga. It was an average of about $300, if I remember 
right. 

Mr. Crumpacker. Now, do the European countries in their cus¬ 
toms impositions discriminate against Porto Rican sugar? 

Mr. Larrinaga. Yes, sir; and against coffee and all products. 

Mr. Crumimuker. I mean against Porto Rican coffee. Hoav much 
more tariff does Porto Rican coffee have to pay in European ports 
than Java coffee? 

Mr. Larrinaga. I could not tell you the figures now unless I could 
look at some of my papers. It is about three times as much now as 
it was before, I believe. I should not like that statement to be taken 
as accurate. I know the tariff is so high that goods that we send 
there sell as I was telling you, at four times the price that they sell 
for in New York, and yet we have to send them to New York in 
preference, as the tariff in Europe is so high. In every one of those 
countries the tariff is different, but they very nearly balance the 
Dingley tariff, so that we can not place our staple there. 

The "Chairman. Will you please proceed with the description of 
the island. 

Mr. Larrinaga. The island of Porto Rico, as you see, has had for 
many years some very good roads. 

The Chairman. Permit me to suggest first that you point out the 
locations of the several principal cities, and state their size. 

Mr. Larrinaga. Here is San Juan, the capital, with 36.000 in¬ 
habitants [indicating on map]. Here is Ponce on the south coast, 
which is the next largest city. Ponce has about 30,000 inhabitants, 
I believe. Next comes Mayaguez, on the Avest side, which is a little 
smaller—fifteen or twenty thousand inhabitants. Then comes, in 
the eastern part of the island, Humacao, about 5,000. Then here is 
Guayama, about 4,000, where some of the Americans landed, and 
here is Guanica. the first landing place of the American army; and 
here on the north coast is Arecibo, about 9,000. Those towns are the 


60 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

largest in the island. Of course those towns are in the flat part of 
the land, and are seaports. 

The Chairman. You have, scattered all through the island, towns 
of from two to five thousand population? 

Mr. Larrinaga. We have some 60 or TO small towns scattered 
through the island. 

The Chairman. What is the aggregate population of the island 
now? 

Mr. Larrinaga. We count that it goes beyond a million. I will 
tell you the reason of that. The last census gives 960.000 inhabi¬ 
tants, but an accurate census in Porto Rico is a very difficult task. 
There are people here high up in the mountains, where the census 
agents do not go to take accurately the number of children. Every 
one of those farmers there has a half a dozen children at least. And 
we hold that the census has never been fully taken; that there is 
always at least 10 per cent left out. 

So that we count that we have a million people to-day, in spite of 
the great suffering, and in spite of the thousands who have migrated 
across this country to the Hawaiian Islands and other places. These 
emigrants are working in the sugar plantations of Hawaii, and in 
many other countries, like in Ecuador and other countries in South 
America. And that is one of our contentions, that Porto Rico in 
all its history never had such a thing happen before; that a Porto 
Rican was never known to take his family and go away for a living; 
but now, from 1900 on, we have had that misfortune. But in spite 
of that I believe that the population is oyer a million. And it is 
very evenly distributed. In our country property was very evenly 
divided also. There were a good many little freeholders there. 
But they are very fast disappearing on account of the banks and 
the money-lending corporations being obliged to rake in those prop¬ 
erties and foreclose their mortgages; and every one of those houses, 
or banking institutions, that never had any coffee property before, 
is now holding from 20 to 30 properties, or even more of those little 
properties. 

Mr. Gilbert. Pardon me again, for one question. You said just 
now, if I recollect you correctly, that under the Spanish regime there 
was no instance of Porto Ricans taking their families and emigrating 
for a living? 

Mr. Larrinaga. No, sir. 

Mr. Gilbert. And now there are a good many instances of that 
sort? 

Mr. Larrinaga. Yes, sir; now. The last news I heard there was 
another emigration on foot for the south of Mexico. 

Mr. Gilbert. Is that due to the cyclones or to the storms, or the 
misgovernment, in the estimation of the people? 

Mr. Larrinaga. To everything combined, sir. 

Mr. Gilbert. Is there any sense of oppression prevailing in the 
minds of the masses of your people, any feeling that the government 
is now less satisfactory to them than it was under the Spanish 
regime? Is there any extensive feeling of that sort among the 
people ? 

Mr. Larrinaga. Unfortunately, there is. And that is the reason 
why the municipalities have formed a league and sent those two gen- 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 61 


tlemen here who are before you this morning—just to arrest that 
sentiment. 

Mr. Kinkaid. How about increased population as the cause of the 
emigration ? 

Mr. Larrinaga. I do not think that is so. Porto Rico is a very 
fertile country. 

Mr. Kinkaid. Is not your population the largest it has ever been? 

Mr. Larrinaga. I guess it is not very much so, because with a 
million people, those thousands that have emigrated, I do not think 
would cut much figure in the population. 

Mr. Kinkaid. Is not your population the largest which you have 
ever had there ? 

Mr. Larrinaga. The last census, I believe, was close to a million—- 
960,000 inhabitants. 

Mr. Kinkaid. It is nearly a million now ? 

Mr. Larrinaga. Yes, sir; I reckon it at that. 

Mr. Kinkaid. And that is how many thousand more than the pre¬ 
vious census ? 

Mr. Larrinaga. It may be about 40,000. That census I am speak¬ 
ing of is the census of 1900, which was made by the Americans. 

Mr. Kinkaid. People are traveling and emigrating more from 
their own countries of late years, anyhow, than formerly, are they not ? 

Mr. Larrinaga. Yes, sir; that is a fact. 

Mr. Kinkaid. There is more change in the world all over? 

Mr. Larrinaga. Yes, sir. 

Mr. Rucker. Suppose this Congress should pass an amendment to 
your organic act—I suppose that is the proper term to use—along 
the lines of the bill presented here, w r ould that have a tendency to 
restore confidence there ? 

Mr. Larrinaga. Surely, sir; surely. 

Mr. Rucker. And give satisfaction ? 

Mr. Larrinaga. And give full satisfaction. It will be the realiza¬ 
tion of their hopes. They have not lost hope in the American people. 
Our parents were improvident, we admit, but they sent their children 
abroad to be educated, to Spain, France, Germany, Belgium, and the 
United States. Not many to England, but a good many more to the 
United States than to any other country. 

Mr. Rucker. Is that tendency growing, or is it on the wane now? 
Are they sending more up north for education ? 

Mr. Larrinaga. Yes. There is one place near Washington—Balti¬ 
more_where there are 30 or 40 that I know of in one single institu¬ 

tion. They go to Virginia and Harvard and Yale and Columbia and 
Philadelphia. They are coming over in much larger number's, ten to 
one, as compared with past years. 

But those old Porto Ricans, so to speak, that were educated here, 
like myself, went back there, and we instructed the Porto Ricans. 
We told them of the American people. We had learned here how to 
love and how to revere your institutions • and your people, and we 
went there, and for years and years have told them that Porto Rico 
was to belong to the United States. We explained that to them, and 
told them how the great nation here had to expand, and would not 
allow European powers to be at the door of the country, and they 
were prepared for your coming. 


62 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Kinkaid. Has it not been the belief of the leading statesmen 
and influential men of the island all the time that sooner or later the 
United States would do all for you that you have hoped it would 
do, and that Porto Rico would attain all that it has ever aspired to, 
so far as government by the people of Porto Rico is concerned ? 

Mr. Larrinaga. They have always believed that, and they never 
have lost hope. 

Mr. Kinkaid. You have realized—you leaders—from the first, have 
you not, that you would have to be on probation, as it were, for a 
while—on trial, as it were—and that these things which you desire 
so much would be given to you gradually, and that ultimately all 
would he entirely satisfactory ? 

Mr. Larrinaga. We have always believed it, and we have imbued 
that in the minds of every Porto Rican; so that when the Americans 
arrived—we had no grudge against Spain—but the Americans were 
received like friends. When the Foraker act was enacted we told the 
Porto Ricans “ that they must be patriotic. The Government of the 
United States had in hand the Philippine Islands, and Cuba was yet 
in their hands.” Nobody knew what was going to come, and we 
told the Porto Ricans that we firmly believed this was only a tempor¬ 
ary act; and they were satisfied, and they waited. Only they think 
that they have waited long enough—seven years—and they think that 
it is time that something should be done. 

Mr. Rucker. They think that probation has about expired, and 
that it is about time that the promises which have been made should 
be kept in all good faith ? 

Mr. Larrinaga. Yes, sir. 

The Chairman. Please tell us about the highways and railroads. 

Mr. Larrinaga. As means of communication Porto Rico has not 
many, but very beautiful, roads. There is the main road from San 
Juan, climbing over the hills and mountains, and coming down to 
the south coast at Ponce this way [indicating on map]. That is a 
beautiful road. The Americans have called it a military road. It 
was never a military road, but the name “ military road ” took, and 
it is called the military road now. 

Mr. Kinkaid. Is not that the road that General Miles went over? 

Mr. Larrinaga. A part of it; yes, sir. 

Mr. Gilbert. What is the length of that road ? 

Mr. Larrinaga. About 136 kilometers—about 85 miles. 

Mr. Gilbert. That beautiful road you speak of? 

Mr. Larrinaga. Yes, sir; but there is one prettier than that, here 
from Cayay to Guayama. 

The Chairman. You say that that road is 85 miles long; but it is 
only 40 miles across the island. 

Mr. Larrinaga. That is with all its meanderings. It comes down 
this way and then that way [indicating on map], and then down to 
Ponce. It is not straight, by any means, like all mountain roads. 
There is another fine road from San Juan east, and one from Ponce to 
Arecibo. 

Mr. Gilbert. I am curious enough to be interested about that. Do 
the old-fashioned stage coaches drawn by horses transport passengers 
from one town to another, or what is the public means of commu¬ 
nication ? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 63 

Mr. Larrinaga. There are several. In this main road, from San 
Juan to Ponce, there are different lines of coaches. They are not 
heavy stage coaches. These are light. They will take from four to 
half a dozen people. And then there is a line of automobiles that I 
bought last summer for a friend of mine, and they were running, too, 
when I left the island. 

Mr. Kinkaid. That is all right. 

Mr. Larrinaga. We have two lines of automobiles in the island. 

Mr. Rucker. That is public transportation, I take it. 

Mr. Page. Yes. 

Mr. Larrinaga. There is a gap in the railroad line from Camuy to 
Aguadilla that is filled by a line of automobiles. There is another 
beautiful road going from Arecibo to Utuado in the interior, and 
from there to Arecibo. Then there is another good one from Maya- 
guez to San German. 

Mr. Rucker. What is the character of these roads; are they just 
dirt roads ? 

Mr. Larrinaga. No, sir; they are real macadam, with the best 
works of art built in any country, cut stone and steel trusses for 
bridges. 

Mr. Gilbert. Up in those mountains, as you go along in the stage 
coach, are there nice houses and places all along ? 

Mr. Larrinaga. Yes, sir; they are all full of houses. 

Mr. Gilbert. And is it comfortable in the midsummer time up in 
those mountains? 

Mr. Larrinaga. Oh, beautiful! The Americans enjoy it a great 
deal. The first thing they do is to take an automobile and go up into 
the mountains. It is a very pretty ride over the road that goes across 
the island from Ponce to Arecibo. That goes more straight. 

Mr.. Gilbert. Have you any temperate-zone fruits up in there, such 
as apples? 

Mr. Larrinaga. No, sir. Oranges and grapes in this end of tfie 
island [indicating], but no apples. 

Mr. Rucker. Will not apples grow there? 

Mr. Larrinaga. The experiment has never been tried, I think. 

The Chairman. The United States Government has an agricultural 
experiment station there, I believe ? 

Mr. Larrinaga. Yes, it has; and they may have made some good 
experiments. They may have done something good. 

Mr. Smith. I may say that in the last few years, since I have been 
in Porto Rico, I am called upon annually , by a good many of the 
people living there—Porto Ricans and others—for publications on 
agriculture and everything of that kind, and I send them books every 
year and have been doing so for years; that is, to those who call on 
me. I have sent a great many there. 

The Chairman. How did you find those roads, Mr. Smith? 

Mr. Smith. They are like boulevards in a city; I would say they 
are like our city boulevards. They are not perfectly level, but so far 
as quality is concerned they are equal to any boulevard we have in 
any city "of the States, substantially. 

The Chairman. Where are the railroads there? 

Mr. Larrinaga. The main line of railroad goes from San Juan 
around the bay and along the northern and western coast, and except 


64 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

here, where the traffic is carried by automobiles [indicating on map], 
there is no break, and the railroad extends all around this part of the 
island. A stretch from Ponce to Guayama has been built by the 
Aguirre Sugar Plantation Company. They obtained a franchise 
from the government, and completed the road from Guayama to 
Ponce [indicating]. You can go on the railroad, with the exception 
of this short distance, where there is a gap. With that exception, you 
can go all around the whole island, from here to San Juan [indicat¬ 
ing]. There is another road here to Carolina, so that we have only 
this gap from Carolina to Guayama to fill. 

There is a trolley road here [indicating]. That was the first steanl 
railroad in the island. I built it in 1879 from San Juan to Rio 
Piedras. That is a beautiful route, and the trolley line now operating 
it is doing a very heavy traffic. 

The Chairman. What is your profession ? 

Mr. Larrinaga. Civil engineer. I have been over every foot of 
that island. I had the good or bad fortune of being the senior engi¬ 
neer of the island, and I had to do a large part of that work. Next 
to our roads, there is another very important feature of Porto Rico. 
For many years we have had as good a system of coast lights, with 
good light-houses, as there is any country. It compares very favor¬ 
ably with your own coast-lighting system as far as the number of the 
stations is concerned. 

Beginning here at the east, on the island of Culebra, there is a 
light-house. In Vieques Island there are two lights; here at the Cape 
of Malaparcua there is another. Arroyo has a light-house, and 
Ponce and this island. Caja de Muertos, also have light-houses. 
Guanica and Cabo Rojo and Rincon and Aguadilla and Arecibo 
and San Juan and Mona Island, a little island here belonging to 
Porto Rico, have light-houses also. So that you can sail around the 
whole island of Porto Rico from one light-house to another. It is 
a, very scientifically studied and constructed system, and I do not 
believe there is an island in the world much better prepared for 
navigation. 

Mr. Kinkaid. What is the average width of the island north and 
south ? 

Mr. Larrinaga. Forty miles. 

Mr. Crumpacker. What have you to say about the telegraph and 
telephone communications ? 

Mr. Larrinaga. We have lost in telegraph, but we are catching up 
again. When the War. Department took hold there it omitted a 
good many little statiQns, but we are putting them back again. 

Mr. Crumpacker. What cable communication have you? 

Mr. Larrinaga. We have communication with the United States 
and with Jamaica, Santo Domingo, etc. We have two cables. One 
is the West Indian and Panama Company, and I forget the name of 
the other. The other goes through Bermuda to the north. One of 
them goes to Haiti, and from there it goes up to the Bermuda 
Islands and comes to the northern part of the United States and 
Canada. The other goes to Mexico. That is called the West Indian 
and Panama, 

Mr. Crumpacker. How is your mail service in the island ? 

Mr. Larrinaga. Very good. The Post-Office Department has done 
a very good work there. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 65 

Mr. Crumpacker. How about your schools ? 

Mr. Larrinaga. In the schools we have made quite good progress. 
In reference to the schools there is one point that I have never heard 
mentioned, but I believe that in that matter there is one great draw¬ 
back. We have nearly doubled the number of our schools. In the 
Spanish time the schools were in hired houses. Now there are many 
fine buildings, and the number has nearly doubled. 

Of course the number of children has increased largely, although 
not in proportion to the money we are spending; but the main reason 
why the number of children is not in proportion to the schools and 
expenditures is that the poor people have not the means to dress their 
children properly to go to school, and as long as they are not better 
off the attendance of children to school will not be much improved. 

The Chairman. They are too proud to go to school ? 

Mr. Larrinaga. Yes, sir; that may be. You have heard the expres¬ 
sion “ proud as a Spanish beggar.’’ 

Well, no, Mr. Cooper, that is not it. In the school they do not 
admit them that way, or they do not care to go. But the American 
school system established there is good and the organization also, and 
the moment Porto Rico gets a little better off from a financial point 
of view the attendance of children to schools will be largely in¬ 
creased. It is larger now than it was before. 

Mr. Crumpacker. They teach the Spanish language in the schools, 
I suppose? 

Mr. Larrinaga. Yes, sir; but there is an English teacher in every 
school. 

Air. Crumpacker. An English teacher trying to teach Spanish? 

Mr. Larrinaga. No,.sir; they learn Spanish. As a rule they take 
a class in Spanish themselves. 

Air. Gilbert. And is there an intermingling of the races in the 
schools, of the black and the white? 

Air. Larrinaga. Yes, sir. Let me tell you about this. The black 
race keeps more on the border, in the seaports. They do not go up 
into the interior, as a rule. You may travel for days in the interior 
and never see a black face. 

Mr. Gilbert. What is the proportion of blacks to whites in the 
island ? 

Mr. Larrinaga. The blacks are only about one-third. 

Air. Gilbert. The population is only about one-third black, and 
the children of the black folks do not attend schools? 

Mr. Larrinaga. Yes, sir, they do; but in the interior where they 
are so poor they have not the means to prepare the children at present. 

Air. Gilbert You say the black people are not up in the mountains, 
but are chiefly down in the valleys ? 

Mr. Larrinaga. Down on the coast. It is very seldom you see 
them up in the interior. 

Air. Rucker. How cold does it get up in the mountains? 

Mr. Larrinaga. Thirteen degrees centigrade, which would be 
55° F. 

Air. Kink aid. It is generally above the freezing point, then? 

Mr! Larrinaga. Yes, sir. I think once I recollect seeing, in Ad- 
juntas, the thermometer go down to 12°. 

The Chairman. That would be about 52° F. 


35815—08-5 


66 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Larrinaga. Yes, sir, about that; but even up in the highest 
mountains in the month of January this is an exceptional tem¬ 
perature. 

Mr. Rucker. How hot does it get in the summer time? 

Mr. Larrinaga. Not so hot as it gets here in Washington, about 
99°. 

Mr. Hubbard. My brother has lived in the island for several years, 
and he tells me that he has suffered more from the heat in northern 
Iowa than he has at any time in the two years he has been in Porto 
Rico. 

Mr. Larrinaga. Yes, sir. There are the trade winds, the breezes 
that blow all the time, and refresh the air. 

Mr. Crumpacker. Now, the chief object of your bill is to establish 
more complete political autonomy on the island ? 

Mr. LarrinAga. Yes, sir. 

Mr. Crumpacker. I have not consulted the census report. Can 
you tell me what is the percentage of illiteracy in the island, say 
upon the part of adults ? 

Mr. Larrinaga. There is something to be said about that. Accord¬ 
ing to our last census, of course, perhaps we had TO per cent. 

Mr. Crumpacker. Seventy per cent of illiteracy. 

Mr. Larrinaga. It may be. I do not want to be quoted on these 
figures, because I have not got them before me. 

Mr. Crumpacker. My recollection is that you require an educa¬ 
tional or property qualification for suffrage down there, do you? 

Mr. Larrinaga. In old times we had it at times. Sometimes we 
had full suffrage as we have to-day, as when the Republic was pro¬ 
claimed in Spain and when we had self-government. 

Mr. Crumpacker. Full suffrage? 

Mr. Larrinaga. Yes, sir. 

Mr. Crumpacker. Do the people generally, the laboring people, 
show any interest in political affairs? 

Mr. Larrinaga. Yes, sir. 

Mr. Crumpacker. And do they attend the elections and vote ? 

Mr. Larrinaga. Yes, sir. Why, you would be astonished to go 
into the interior of the island and speak with those farmers who do 
not know how to read and write. I would trust one of those men on 
a jury sooner than I would any of the educated lower classes in San 
Juan or Ponce. You would be astonished to find what a sound judg¬ 
ment those farmers have. 

Mr. Crumpacker. They are men of sturdy character, are they? 

Mr. Larrinaga. Very sturdy character, and they are very law 
abiding. 

The Chairman. If that is all, Mr. Larrinaga, Mayor Todd may fin¬ 
ish his statement now\ 

Mr. Larrinaga. I thank the committee for their kindness. 

Mr. Rucker. You have given us a very interesting narrative. It 
has been very interesting to me. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 67 


STATEMENT OF ROBERT H. TODD—Continued. 

The Chairman. I wish that you would speak about the public 
buildings in Porto Pico, and also about the land which is proposed to 
be taken for army and navy purposes just outside the limits of San 
Juan; how, if at all, in you** judgment, the future growth of San 
Juan may be retarded. First, as to the public buildings. 

Mr. Todd. I will talk about San Juan, if the committee will allow 
me, because it is the town I know most about. San Juan hardly needs 
for its uses any new public buildings, outside of a Federal building, 
of course. 

There was some talk about two years ago of the proposition of 
erecting a Federal building to house the Federal court, the custom¬ 
house, the post-office, and the immigration bureau. I do not know 
what has been done and what is the impression over here in Congress 
about it, but I think there is a need of such a building down there. 

But regarding the insular buildings, I think we have all we want. 
When the transfer of government occurred there was some misunder¬ 
standing regarding the titles to certain public buildings. In regard 
to many of those buildings their title was clear as to the insular gov¬ 
ernment and they were transferred right away. But the titles to 
others were not so clear, on account of the land being what they called 
war land, which belonged to the war department of Spain, although 
the building itself had been erected at the expense of the island. 

But the Federal Government, through its War Department, was 
good enough to turn over its title to the island, and on consideration of 
certain other propert}^ being transferred to the War Department 
transferred those buildings to the insular government. Those build¬ 
ings to-day, most of them, are used for public purposes. For in¬ 
stance, in our organic act the governor of Porto Rico is given the use 
of a public building for his residence, and of course he occupies the 
same palace which used to be occupied by the Spanish captain-gen¬ 
erals. He is the only official recognized by our organic act to be en¬ 
titled to a public building for his residence. 

Then there are other buildings which are used for public offices, as 
the treasury department, the department of the interior, and so on. 

Now, there are other buildings which we Porto Ricans think are 
wrongly occupied by some gentlemen who are not entitled to use them 
for living quarters; and that without paying one cent to the insular 
treasury for the use of these buildings. For instance, take the legis¬ 
lative assembly. The legislative assembly is occupying a very unde¬ 
sirable building. The place where they hold their sessions is rather 
small. The public are very badly accommodated. Whenever there 
is an interesting session of the lower house, for instance, there is not 
room enough for the public. They are crowded in in a very small 
place. The executive council occupies another place in the same 
building, and it is just as undesirable as the one occupied by the 
lower house. This building is on a very noisy street, and it is very 
undesirable. 

We have to station police at the corners so as to prevent heavy 
traffic when the legislature is in session in order to avoid the noise, 
and we have always thought down there that inasmuch as we could 
not afford to spend lots of money in erecting a capitol building, that 


68 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

we ought to occupy, for our legislative assembly, some other building 
more suitable for that, purpose. And there is such a building. It 
used to be occupied in the Spanish times by the military governor. 
We always had two governors, one who was called the captain-general 
and the other, who was called the military governor, who had super¬ 
vision over the military department. That building has always been 
occupied since the first civil government' in Porto Rico in 1900 by the 
secretary of Porto Rico and his family. It is one of the largest pub¬ 
lic buildings in San Juan. 

The Chairman. What do you mean, an American who was sent 
down there? 

Mr. Todd. Yes, sir. No Porto Rican is occupying any public 
buildings. 

The Chairman. He and his family occupy that? 

Mr. Todd. Yes, sir; he and his wife. That is all his family. 

Mr. Rucker. How large is that building? 

Mr. Todd. It is a building that both houses of the legislature could 
be accommodated in. 

The Chairman. What rental does he pay? 

Mr. Todd. None; none. Then take the treasurer, the auditor, the 
commissioner of the interior, and the commissioner of education; 
they all occupy public buildings without paying one cent of rent. 

Mr. Webber. They occupy them for living purposes? 

Mr. Todd. Yes, sir: and they get their water for living purposes 
without paying anything. I know that, because the city of San Juan 
sells the water. And they get electric light, also paid out of the pub¬ 
lic funds. And this is one of the things which is very largely 
spoken about and criticised in Porto Rico. People do not like it. 
They think that it is a bad way of teaching the Porto Ricans to gov¬ 
ern themselves. If we should do that when we had the administra¬ 
tion of our affairs it would be said that it was Spanish teaching. 

Mr. Rucker. Are all those buildings occupied by American offi¬ 
cials ? 

Mr. Todd. Yes, sir. I would say that there is not a single Porto 
Rican occupying a public building as a residence. 

Mr. Rucker. Probably they are just occupying them during some 
probationary period, and probably they will move out after awhile. 

Mr. Todd. That is what we hope. 

Mr. Ritcker. They ought to. 

The Chairman. How long have they been occupying that build¬ 
ing? 

Mr. Todd. Since the civil government was first established. 

Mr. Webber. What other buildings are occupied by anybody ex¬ 
cept the secretary These are different buildings you have been 
speaking about, are they not? 

Mr. Todd. Yes, sir. As I said, the insular government occupies 
a good many buildings that could be put to public use. 

Mr. Webber. Does each of these officers have a separate building? 

Mr. Todd. There is a certain building that is divided into different 
quarters, divided expressly for that purpose by the insular govern¬ 
ment, Now, while these gentlemen are occupying these buildings, 
there is the supreme court of Porto Rico, and’ the district court of 
San Juan, which is the most important of our district courts in a 
business way, occupying an old, rotten building which is a disgrace. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 69 

M lien an important trial is going on there the people can not find 
good accommodation if they go and look at the procedure. 

Mr. Kinkaid. This occupation by the officials of these buildings 
commenced with the very first establishment of the civil government, 
and each new man who has succeeded to office has gone on and done as 
his predecessor did ? 

Mr. Todd. Yes, sir. 

Mr. Kinkaid. Has any formal complaint by any official in Porto 
Rico, or any prominent citizen who takes part in public affairs, ever 
been made to the administration here at Washington about that? 

Mr. Todd. I do not think so. 

Mr. Kinkaid. Xo. Is this.the first formal complaint or statement 
that has been made of this fact, so far as you know ? 

Mr. Todd. Yes, sir. 

Mr. Kinkaid. Yes. 

Mr. Todd. I will say that during the first session of the legislature 
I was a member of the lower house, and it was so unsatisfactory to 
carry on our business—our legislative and committee business—that 
I called the attention of Governor Hunt to this matter and pointed 
out this palace—it is called the “ red palace ”—occupied bv the secre¬ 
tary of Porto Rico. I called his attention to that, and I told him 
that I thought the building could be. with the expenditure of a very 
little money, put in good order and repair for the legislative assembly. 

He did not like the remark. He did not like the suggestion, and 
even said that the secretary of Porto Rico was occupying that build¬ 
ing by special permission from the President of the United States; 
that he had received a letter from the President of the United States 
authorizing him to turn over that building to the secretary of Porto 
Rico. 

The Chairman. Of course the President knew nothing about that, 
unless he had been requested to do that by somebody else. 

Mr. Todd. That is right. 

Mr. Crum packer. Does the secretary have his public offices in that 
building? 

Mr. Todd. Xo, sir; he has his offices in another building, separate 
from this. 

Mr. Crumpacker. And these administration officers down there, 
who occupy public buildings, are the men who constitute the executive 
council ? 

Mr. Todd. Yes; the so-called cabinet of the governor. 

Mr. Crumpacker. And the judges of the courts are not members of 
that executive council, and therefore they have to put up with any 
old building that nobody else wants ? 

Mr. Todd. Yes, sir; I will say that when the day is dark, which 
seldom happens in Porto Rico, but sometimes happens, and it some¬ 
times also happens that they have to hold court in the evening, and 
thev have to light themselves with kerosene. They have not even 
electric-light installation. 

Mr. Kinkaid. Were these buildings federal buildings which were 
used as such during your governmental relations with Spain ? 

Mr. Todd. Yes, sir. . , . _ _ 

Mr. Kinkaid. Were they built by the Spanish federal government? 

Mr. Todd. They were built with Porto Rican money. 

Mr Kinkaid. But they were federal buildings ? 


70 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Todd. They were federal buildings. Well, there is no such 
distinction in Spain as there is in the United States between federal 
and not federal. 

Mr. Kinkaid. Yes. 

Mr. Larrinaga. They were called State buildings. 

Mr. Crumpacker. They were buildings that belonged to the insular 
government ? 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. And you say that the United States Government 
has not any buildings at all down there ? 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. It has the custom-house, I suppose. 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. And the post-office? 

Mr. Todd. No, sir; the post-office is paying rent in one of our in¬ 
sular government buildings. 

Mr. Crumpacker. Paying the insular government a rental? 

Mr. Todd. Yes, sir. 

Mr. Crumpacker. Is that a satisfactory building? 

Mr. Todd. Yes, sir. It is the ground floor of the building occupied 
by the legislative assembly. It is in a very central part of the town, 
but is not suitable for the post-office. 

Mr. Smith. Is the post-office in the same building now that it has 
been in all along ? 

Mr. Todd. Yes, sir. 

Mr. Kinkaid. These buildings about which you complain, what 
were they used for previous to the Spanish war ? 

Mr. Todd. The building occupied by the present governor was occu¬ 
pied by the captain-general as living quarters. 

Mr. Rucker. There is no complaint about his occupying that build¬ 
ing, because the law recognizes that occupation? 

Mr. Todd. No, sir; no complaint whatever. The law recognizes it. 

Mr. Kinkaid. That is all right ? 

Mr. Todd. Yes, sir. The next in importance is the pink palace, 
occupied by the secretary of Porto Rico. That used to be occupied by 
the military governor in Spanish times. He had his living quarters 
upstairs, and downstairs his offices and his aids. There is another 
building there, near the executive mansion, that is occupied by the 
different officials to-day, which used to be the living quarters of what 
they used to call the staff of the governor—the general staff. 

Mr. Kinkaid. You feel that the injustice in the occupation of these 
buildings consists in, first, your being deprived of the use of them for 
insular purposes when you need them for insular purposes, and, sec¬ 
ondly, that if the Government of the United States uses them for its 
official purposes the insular government should be paid a rental ? 

Mr. Todd. I do not. I do not say that about it. 

Mr. Rucker. As I understand it, he says that what the governor 
needs for his governmental purposes there is no complaint about? 

Mr. Todd. None whatever. 

Mr. Rucker. But he does complain of these salaried officers who 
come down and appropriate these buildings for private residences ? 

Mr. Todd. Yes, sir. 

Mr. Rucker. I am glad that that council is down there. I think 
they would take the Capitol of the United States if they had a chance. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 71 

Mr. Crumpacker. There is no row about that ? 

Mr. Todd. None whatever. The newspapers have always called 
the attention of the Government to it, but no attention is paid to it. 

Mr. Kinkaid. The complaint is that they are occupied for private 
purposes ? 

Mr. Todd. Yes, sir. 

Mr. Kinkaid. When they should be occupied exclusively for public 
purposes ? 

Mr. Todd. Yes, sir. 

Mr. Kinkaid. There is no compensation paid for the use of those 
buildings for private purposes? 

Mr. Todd. None whatever. 

Mr. Hubbard. The fact is that you are put into inferior buildings 
that you have to use for governmental purposes, so that these build¬ 
ings you speak of may be occupied for private purposes ? 

Mr. Todd. Yes, sir. 

Mr. Hubbard. The United States court is put in an inferior place? 

Mr. Todd. Yes, sir. 

Mr. Hubbard. And the United States judge is occupying an in¬ 
ferior place ? ? 

Mr. Todd. Yes, sir. 

Mr. Gilbert. How many newspapers are there in Porto Rico pub¬ 
lished in the English language? 

Mr. Todd. There was one, edited by an American gentleman, since 
the Americans first came there, but unfortunately he had to leave 
the country a year and a half ago. If the committee will excuse me 
for deviating from the public building matter for a moment, I will 
say that here is one of the causes of ill feeling on the part of Porto 
Rico which I am going to explain right here. There are two 
different kinds of ethics exercised in Porto Rico by the American 
gentlemen who go down there to show us liow to govern ourselves. 
One is that which they use when they are dealing with Porto Ricans, 
and the other that which they use when they are dealing with 
Americans. This gentleman was what you would call a yellow- 
newspaper man, and he was very energetic, but he happened to be 
entrapped in the meshes of the law, through some of his articles, 
and he was sentenced by a jury in the local courts, and the sentence 
was confirmed on appeal by the supreme court of Porto Rico. 

The Chairman. Was that sentence imprisonment? 

Mr. Todd. He was sentenced to one year’s imprisonment, and he 
took an appeal on some technicality up "to the Supreme Court of the 
United States, and two or three months ago, during the absence on 
vacation of the governor of Porto Rico, the Supreme Court of the 
United States confirmed that sentence. So that that man would 
have haid to go down to Porto Rico and serve his sentence. But the 
governor of Porto Rico—the gentleman who was occupying that 
position then, temporarily—I do not know whether it was on the 
petition of this man or not—commuted the sentence for a fine of $100. 
Now, that is the first case that ever happened in Porto Rico where 
a man was sentenced to imprisonment, and the sentence confirmed by 
two supreme courts, that his sentence was ever commuted to a fine. 
The man was out on bail in New York for over a year, and did not 
have to return to the island. 

The Chairman. He was found guilty of criminal libel, was he ? 


72 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Todd. Yes, sir. 

Mr. Gilbert. There is no English newspaper published in the 
island now? 

Mr. Todd. None that I know of. 

Mr. Gilbert. Your laws are promulgated in Spanish? 

Mr. Todd. In both Spanish and English. Both the English and 
the Spanish are the official languages. 

The Chairman. Here is a question that I want to ask you. As 
I understand it, and I was greatly surprised when you so informed 
me, the decisions of your supreme court are not printed ? 

Mr. Todd. They are not printed. 

The Chairman. In bound volumes, which can be found in the 
courts ? 

Mr. Todd. No, sir; they are not. 

The Chairman. Not even in your supreme and appellate courts? 

Mr. Todd. No, sir. The legislature of Porto Rico two years ago 
enacted a law and set aside a sum of money for the publishing of 
these reports, and yet not one single volume has been published. 

Mr. Rucker. Why, Mr. Mayor. 

Mr. Todd. I could not tell you. 

Mr. Rucker. The money has been appropriated for it? 

Mr. Todd. Yes, sir. 

Mr. Page. Is that publication in the hands of the governor and his 
council; or in whose hands would the publication naturally be ? 

Mr. Todd. I suppose that would be in the hands of the supreme 
court themselves, or in the office of the attorney-general. 

The Chairman. How do they send the decisions around, by type¬ 
written copies? 

Mr. Todd. Yes, sir. 

The Chairman. In the Philippines they have bound copies of 
their supreme court reports, and these are having a very beneficial 
effect. That is one of the splendid things there about our administra¬ 
tion. 

Mr. Rucker. What means have the lawyers practicing there of 
knowing how the law has been construed? 

Mr. Todd. We have our laws codified. 

Mr. Rucker. That has been codified ? 

Mr. Todd. Yes, sir. 

Mr. Rucker. But as to the rulings of the courts you have nothing 
but a typewritten copy. 

Mr. Todd. Yes, sir; that is all. 

Mr. Rucker. And if a man loses his typewritten copy the law is 
lost and you have to get it over again? 

Mr. Todd. Yes, sir. 

Mr. Rucker. That is a chaotic state of affairs. 

Mr. Gilbert. As to the trial courts, are they conducted in English ? 

Mr. Todd. No, sir. We have a federal court whose procedure is in 
English, of course. 

Mr. Gilbert. What is the means by which the people at large 
become acquainted with the proceedings of the legislature and the 
proceedings of the courts ? 

Mr. Todd. None whatever. The legislative assembly publishes 
each year after its session, in two languages, the English and Span¬ 
ish, its enactments. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 73 

As to this question of the public lands, which the chairman asked 
me about, I have to say that San Juan has only one way of expand¬ 
ing, and that is from the west to the east, because San Juan was a 
walled-in city. It was w T alled in for military purposes in the eight¬ 
eenth century; I don’t remember the date. 

Well, just a year before the American invasion the wall of the 
eastern part of the city was knocked down. The Spanish Govern¬ 
ment authorized the people of San Juan to knock down the wall, and 
of course to expand. When the Americans came over the plans for 
the extending of the city were not made out yet. They were in course 
of preparation. And in transferring the federal property this 
public land, the land outside of San Juan, was included in what 
they call Crown lands. The city of San Juan tried at various times 
through the military governor. General Davis, to impress the United 
States with the fact that that land was not Crown land, but with no 
result. 

When a bill was before Congress authorizing the President in 1900, 
or 1901, I think it was, to set aside from the public lands of Porto 
Rico those lands needed for military and naval purposes, and to turn 
over the balance to the island of Porto Rico, the city council of San 
Juan addressed communications to both committees of Congress-^- 
this committee and the committee of the Senate—asking for a hear¬ 
ing. I do not know w T hether the chairman will remember that or not. 
Unfortunately we never had the opportunity of coming before the 
committees to explain our claim to that land. I suppose Congress 
thought that they could not w T ell go into the details of slich a thing if 
the 66 municipalities of the island should come before Congress and 
ask for such a thing, so that it was decided that the President of the 
United States should select the lands which he needed for military 
and naval purposes and transfer the balance to the insular govern- 
ment. 

The city of San Juan applied to the legislature of Porto Rico in 
two separate sessions to try to get back that land—the land trans¬ 
ferred by the act of Congress—with no avail. 

The Chairman. What was the reason you could not get it back 
from the insular government ? 

Mr. Todd. Because they did not pay any attention whatever. 

Mr. Rucker. That w T ould come up before your house of delegates 
and your council that you speak of? 

Mr. Todd. Yes, sir. 

Mr. Rucker. Would neither body take any notice of it ? 

Mr. Todd. None whatever. It was sent to a committee, and the 
committee did not do anything at all. The city council of San Juan, 
which is composed of 15 members elected by the people, thought 
that they had a right to defend the property of the people of San 
Juan. It is valuable property, valued at more than a million dollars, 
and it is something to us. At my suggestion the city council author¬ 
ized me to take the matter into the courts—before the Federal 
court, of course, it being a law of Congress that was involved. That 
resolution was taken by a unanimous vote, and it was approved by 
me, and in bringing that before you I want to show you just what 
kind of a teaching we Porto Ricans are given down there by the 
American officials. 


74 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

I will explain right here that in 1901 the municipal law of Porto 
Rico was changed by the legislative assembly, and a certain right, 
which was vested in the Spanish times in the local legislature of 
Porto Rico, called the provincial deputation, which had the right of 
annulling any resolution of the municipalities, if a taxpayer should 
complain about it, or even without any complaint if it came to their 
knowledge that something was done that was not right was placed in 
the hands of the secretary of Porto Rico, and he was authorized to 
annul any resolution of any municipal council, whenever in his judg¬ 
ment such resolution was against any law, or against public policy. 

The Chairman. You mean that it should be annulled by the sec¬ 
retary of Porto Rico? 

Mr. Todd. The secretary of Porto Rico. 

The Chairman. He is a sort of secretary of state down there? 

Mr. Todd. Yes. 

The Chairman. He occupies the same relative position, and is an 
American sent down there. 

Mr. Todd. Yes, sir. 

The Chairman. He had the right to annul any law, you say- 

Mr. Todd. Any ordinance of any municipal council. 

Mr. Rucker. That right was given him by your legislature ? 

Mr. Todd. By our own legislature. That was done to avoid ex¬ 
pense to the taxpayers. So that if any resolution should be passed by 
any municipal council the taxpayers would not be burdened with 
expenses before the courts, but he could go before this official and ex¬ 
plain the matter, and he would investigate, and if he saw that the 
taxpayer was right, he would annul the ordinance. 

Mr. Gilbert. You say that official annulled an ordinance of the 
city of San Juan? 

Mr. Todd. Many times that was done. 

Mr. Gilbert. Did that deprive you of the privilege, as a munici¬ 
pality, of going before the Federal court to have it determined 
whether this was your property or not ? Why could you not, without 
any act of the municipality, go into the Federal court and have the 
question determined as to wffiose property that was. 

Mr. Todd. I am going to answer that. The secretary of Porto 
Rico annulled the decision of the municipality of San Juan in regard 
to this land question, forgetting, I suppose, that the resolution or the 
ordinance was to sue the insular government, of which he himself was 
a member. At the same time it was promised by other members of 
the executive council, and by the secretary himself, that at the next 
meeting of the legislature, which is now in session, this municipal law 
would be amended, taking away from the secretary that power and 
placing it in the courts. That is what the people of Porto Rico want. 

Mr. Gilbert. The ownership of the land was not a legislative ques¬ 
tion, was it, to be determined? 

Mr. Todd. No, sir; but I am going to explain why I say this. I 
told my friends of the council of San Juan not to do anything, but to 
wait and see what action the legislature would take in regard to the 
municipal law; if the legislature would take away from the secretary 
of Porto Rico that right of annulling ordinances of municipalities, 
then we would go to the courts without any trouble. We Porto 
Ricans always try to avoid trouble if we can help it, and we did not 
want to have any trouble whatever with the officials of the insular 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 75 

government. But in case the legislative assembly should not pass 
that amendment to the municipal law, the city of San Juan is de¬ 
termined to take the matter to court, over the decision of the secretary 
of Porto Rico. 

Mr. Rucker. In that connection, so that it may be clearly under¬ 
stood by myself and other gentlemen, let me ask you this: If there is 
no complaint whatever with reference to that law of your Porto 
Rican legislature or legislative assembly, the blame for the result is 
on the Porto Ricans and not on the Americans; so that you make no 
complaint that the American Government has wronged you, so that 
the wrong comes from your own action and not from the Americans? 

Mr. Todd. No, sir; we do not blame the American Government at 
all. 

Mr. Webber. It is the action of the secretary that you complain of? 

Mr. Todd. Yes, sir. 

Mr. Rucker. I doubt whether he should be blamed for his action. 
The discretion is vested in him, and I doubt whether he should be 
blamed for the exercise of it. 

Mr. Webber. He might exercise it very wrongly. 

Mr. Rucker. Yes; I grant that. 

The Chairman. Will you state what your municipal council wants 
to do, and what the legislature wants to do, and why you think that 
the acts done by the secretary have not been just what they should 
have been ? 

Mr. Todd. The city of San Juan wants to expand, of course, and 
the only wav to expand is on this land in question. Now, these lands 
were given to the city of San Juan in 1511 by the King of Spain, 
when the pueblo of San Juan was established. I have with me, not 
certified copies, because those are in Spain, but a copy of the original 
map and of the original letter, made by the man who was sent by 
the King of Spain to report on the conditions of the little island of 
San Juan for the purpose of placing the pueblo there—the capital 
to-day. He was appointed governor of Santo Domingo, Cuba, and 
Porto Rico. There was only one governor then; and on his way 
down to Santo Domingo, which was the seat of government, he was 
instructed to stop at San Juan and make a report on it, because be¬ 
tween Ponce de Leon and the other Spanish officials there was a 
quarrel. 

They were not in accord in regard to the moving of the city of San 
Juan. History says that Ponce de Leon did not care to move the 
city from one place to the other, because he was the only owner of any 
stone buildings in the little town, and in changing the city he would 
lose his buildings. But the first spot selected was very undesirable, 
because of the mosquitoes and disease, and on the recommendation 
of this governor the little island of San Juan was granted to the 
pueblo in its entirety, and there is a law in the compilation of the 
laws of Indies of that time which gives the size of every pueblo estab¬ 
lished in America, and the size—— 

The Chairman. Every town in America? 

Mr. Todd. Every town in Spanish America. When a town was to 
be established it was set forth in the law how the site should be 
selected and what extension it should have. The living part should 
have all around sufficient land for what you call the “ commons ” of 
the town. Those lands we claim were the commons of the city of San 



76 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Juan, and although two hundred years after the establishment of the 
city it was walled in, we claim that that walling in of the town did 
not take away the right of ownership of the lands outside of the walls. 
The walls were erected only for military purposes, and the military, 
of course, had jurisdiction over the lands outside of the walls, because 
they needed to have that jurisdiction on account of the sweep of 
their cannon, and if any man intended to build outside of the walls 
he had to do so under the regulations made by the* military governor 
in regard to height of the building, etc. 

But that did not take from San Juan the right to the lands, and we 
can establish that in the courts, and w T e hope to do so. San Juan is 
willing, even if it has to sue the Federal Government in some way, 
to give a quit claim to any lands that the United States desire or need 
for naval purposes. We are not opposing that. On the contrary, 
we would like to see the naval station established. But we will have 
to oppose the occupation of .part of the land occupied now bv the 
military department in San Juan. Just the most desirable part of 
that land is occupied by the military department for a corral for 
mules and horses—the most desirable residential part of the land. 

Mr. Bucker. How much of that land is there? 

Mr. Todd. I could not tell you. 

Mr. Bucker. Approximately, how much land is occupied by that 
corral? 

Mr. Todd. I could not tell you. 

Mr. Larrinaga. By the corral proper, probably two acres. 

Mr. Smith. Those lands are where the barracks are? 

Mr. Todd. No, sir; this is outside of San Juan, on the military 
road, on the left-hand side, just at the beginning of the military road. 

The Chairman. The hour of 12 has arrived, and we will have to 
adjourn. We will call you again, Mr. Mayor, and also Mayor Buso. 

Thereupon, at 12 m., the committee adjourned until Monday, Jan¬ 
uary 22, 1906, at 10.30 o’clock a. m. 


Committee on Insular Affairs, 

Monday , Jarmory 22, 1906. 

The committee met at 10.30 o’clock a. m., Hon. Henry Allen Cooper 
in the chair. 

STATEMENT OF HON. ROBERT H. TODD, MAYOR OF SAN JUAN, 
P. R.—Continued. 

The Chairman. Mayor Todd, you may resume. 

Mr. Todd. I do not think that I have many more things to bring to 
the attention of the committee, so I will just finish the remarks I have 
to make, and then place myself at your disposal for the answering of 
any questions that the gentlemen of the committee may wish to 
ask me. 

Mr. Gilbert. I have no interest, personal or political, in news¬ 
papers in Porto Rico, but it seems to me that the people of Porto Rico 
ought to encourage the establishment of a wide-awake, first-class 
English newspaper in the island, in order, in the first place, to have 
direct communication with your institutions, the legislature, and the 
people; and, in the second place, to hasten the development of ideas 
of American institutions. Do you think an English newspaper 
would succeed there? 

Mr. Todd. I think that it would succeed if it should be impartial 
and give things out just as they happen. 

Mr. Gilbert. We seem to think up here that newspapers are indis¬ 
pensable, and if you have no English newspapers down there, I would 
suggest that it would be wise to encourage the introduction of some 
good newspaper in the island. 

Mr. Rucker. The witness says that he thinks that it would be well 
to have an English newspaper in the island if it were an impartial 
one. Up here we like a newspaper no matter whether it be partial or 
impartial. 

Mr. Gilbert. I have no objection to the political complexion of 
them. 

Mr. Todd. I have here some notes which I took about different sub¬ 
jects brought up by our commissioner, Mr. Larrinaga, when he was 
testifying before the committee the other day, and I think that it 
would be well to mention them now. I think that he was asked as 
to cable communication with Porto Rico, and he mentioned the fact 
that there were two cable companies. I think it is well to state, also, 
that we have wireless communication with the world through two 
wireless-telegraph stations belonging to the Navy Department. 

The Chairman. Where are they located ? 

Mr. Todd. In San Juan. I understand that a trial was made a few 
months ago at the largest of the two stations and they had communi¬ 
cation with Manhattan Island—as far as that. 

The Chairman. Up in New York? 


77 


78 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


Mr. Todd. Up in New York. Of course those stations are not 
open to the public; they are Government stations, but through the 
courtesy of the naval officer in charge the public sometimes have the 
use of them. 

Mr. Fuller. Do these stations work so that communication is 
accurate at that distance ? 

Mr. Todd. Yes, sir. ' * 

The Chairman. Do you have local communication with Cuba 
through these wireless stations, or don’t you know? 

Mr. Todd. I can not tell you. I do not know whether or not the 
wireless system has as yet been put in order for that purpose. The 
large one is to have communication with Guantanamo. 

Mr. Gilbert. TYhat is the sanitary condition of your cities as com¬ 
pared with their condition when the Americans took possession of 
the island? 

Mr. Todd. I will speak for San Juan. 

Mr. Gilbert. I do not mean that.you confine yourself to San Juan. 
How about the condition of sanitation generally as to the other cities 
of the island i 

Mr. Todd. It is much improved over what it was when the Span¬ 
iards were there; so much so that although in Spanish times we 
always had more or less yellow fever every year, since the Americans 
came to Porto Rico, in 1898, we have not had a single case of yellow 
fever in the island. In Spanish times we had no sewerage system 
nor sanitary plumbing; but, I am proud to say, the city of San Juan 
now has a complete sewerage system, and there is not a single house 
in the city that is not fitted with sanitary plumbing. We think that 
this is one of the primary causes of good health. 

Down in Ponce, also, improvements have been made, and in 
Mayaguez, Arecibo, and in all the larger cities. 

Mr. Rucker. So that the health has very materially improved in 
the last six or seven years, and there is no yellow fever whatever. 

Mr. Todd. No yellow fever whatever. 

Mr. Rucker. And before that is was an annual occurrence? 

Mr. Todd. Yes, sir; an annual occurrence. We have had years of 
terrible disaster in that direction; so much so that several captains- 
general died of yellow fever. 

Mr. Webber. How does the drinking in the island compare with 
what it was before the Americans went there? 

Mr. Todd. I will have to say, in reply to the gentleman’s question, 
that that is one thing that I was trying to avoid bringing up, but I 
will have to do so now that I have been asked the question. 

Drunkenness in Porto Rico is something unknown. We have a 
Porto Rican battalion, which are not considered as regular troops, but 
they are more nearly regulars than volunteers, and I understand that 
the statistics of that regiment show very little drunkenness among the 
Porto Rican soldiers. I will also say that one rarely sees a Porto 
Rican drunkard on the streets. There is very little drunkenness in 
the island, and you will find in every official report from Porto 
Rico- 

Mr. Page. Is there any restriction in the sale of intoxicants ? 

Mr. Todd. Yes, sir; about the same restrictions as exist in other 
countries as to minors in reference to liquor and cigarettes. 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 79 

Mr. Rucker. How about the observance of Sunday? Is the Sab¬ 
bath observed or not? 

Mr. Todd. Sunday is observed. All you gentlemen know that 
European countries do not observe Sunday the same as the Anglo- 
Saxons; but with the new influences in Porto Rico we have had a 
change, of course, and everything is closed on Sundays. 

The Chairman. You have more of a continental Sunday, I sup¬ 
pose, so far as amusements are concerned—the same as in Europe ? 

Mr. Webber. I do not quite get the force of your answer about the 
comparative sobriety in Porto Rico between the time the Americans 
went there and now. 

Mr. Todd. About Sundays? 

Mr. Webber. No; as to drinking in the island. 

Mr.- Rucker. Do Americans drink that far away from home, or 
not? I would like to know that. 

Mr. Todd. Yes, sir; and I think that it is unfortunate that among 
some of the high-class officials we will find drunkenness on the streets 
and in public places. 

The Chairman. Mr. Mayor, do you know about a man who was 
appointed judge, from this country, going there and being intoxi¬ 
cated? 

Mr. Todd. You mean an attorney-general? 

The Chairman. I do not know—some official. 

Mr. Todd. The official in question was the attorney-general at that 
time. This was an unfortunate occurrence. He arived in Porto 
Rico under the influence of liquor. 

The Chairman. Do you mean to say that he arrived there drunk ? 

Mr. Todd. Yes, sir. And he had to be taken to a hospital right 
away. He had symptoms of delirium tremens, and he kept up this 
drinking for a month, I believe, and his resignation was at once asked 
for from Washington. 

The Chairman. Then was he withdrawn ? Did he come awp,y ? 

Mr. Todd. Yes; he came away. I must say, however, that after 
this gentleman was removed—after his resignation was asked from 
Washington—he stayed in Porto Rico for a couple of months and 
proved to be a very nice man. He was a good lawyer and it was very 
unfortunate that he should have taken to liquor. 

The Chairman. It was rather unfortunate that he should have 
arrived in an intoxicated condition. 

Mr. Todd. Yes, sir; yet to show the kindly disposition of the people 
down there and the discount they make of everything of that kind 
that happens there was not one single native newspaper that printed 
anything about the case. It was just dropped and they tried to for- 
o-et it. They knew that it took place against the good will of the 
people of the States. 

The Chairman. It is a fact, is it not, that the Porto Ricans have 
always been, and now are, a very temperate people, so far as the use 
of intoxicants is concerned ? 

Mr. Todd. Very temperate. But in respect to the drinking habit 
among the officials I can mention many instances among American 
officials, although these cases are not so unfortunate as that of the 
attorney-general, who was obliged to go to the hospital. However, 
in some cases officials have been picked up in the streets and taken to 


80 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

their homes, and while under the influence of liquor have threatened 
the natives with their guns; but on the next day, when they were 
sober, they would go back to business and nothing was said. 

Mr. Rucker. You say that that occurred frequently? 

Mr. Todd. Frequently. 

Mr. Rucker. Mr. Chairman, this is an open session for the discus¬ 
sion of any matter? 

The Chairman. Yes, sir. 

Mr. Rucker. I want to ask you about the marriage obligations and 
relations, Mr. Mayor. How are they? 

Mr. Todd. Very good. You know the Roman Catholic Church 
hws, which were in force in Porto Rico before the Americans came 
there, did not recognize divorces. Of course that was claimed to be 
a good feature of married life. We have changed our law to-day 
and we have a divorce law, but the marriage relation to which you 
refer is not changed at all. 

Mr. Page. What causes are recognized under your law now for 
divorce ? 

Mr. Todd. Unfaithfulness on both sides, abandonment, and, more 
or less, the same causes as are recognized in the States. 

The Chairman. Cruel and inhuman treatment?. 

Mr. Todd. Cruel and inhuman treatment. 

Mr. Rucker. Have you a law in Porto Rico fixing the marriage¬ 
able age ? 

Mr. Todd. Yes, sir. 

Mr. Rucker. What is it? 

Mr. Todd. Sixteen years, I think, for girls. 

Mr. Rucker. How about men ? 

Mr. Todd. Eighteen years. 

Mr. Rucker. And so at that age they can marry without parental 
consent? Under that age they must have consent? 

Mr. .Todd. Yes, sir; in order to marry. 

Mr. Rucker. Are you a lawyer ? 

Mr. Todd. I am. 

Mr. Rucker. How about crime in the islands ? I mean petty crime, 
such as stealing, forgery, etc.—ordinary misdemeanors. 

Mr. Todd. We have about the same as is found in any other coun¬ 
tries the size of Porto Rico. 

Mr. Rucker. It is not as conspicuous, though, as it would be in 
other localities ? 

Mr. Todd. No, sir. 

The Chairman. How many district judges have you? 

Mr. Todd. Five. 

The Chairman. How many are Americans and how many are 
Porto Ricans, as you remember ? 

Mr. Todd. I do not know, sir. 

Mr. Larrinaga. One American and four Porto Ricans. 

Mr. Rucker. What constitutes your appellate court? 

Mr. Larrinaga. We have a supreme court appointed by the Presi¬ 
dent. 

Mr. Rucker. Appeals are direct from the district court to the 
supreme court? 

Mr. Todd. Appeals are direct from the district court to the supreme 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 81 

court; and then we can appeal to the Supreme Court of the United 
States on writs of error and certiorari. 

The Chairman. Has any request ever been made of the authorities 
in Porto Rico to have the opinions of the appellate court and the 
supreme court printed and bound ? 

Mr. Todd. Yes, sir. 

The Chairman. What reason was given for not having that request 
granted ? 

Mr. Todd. I do not think any reasop was given. The legislature 
long ago appropriated money for the putting into effect of this thing, 
but as yet none of the opinions have been printed. 

Mr. Rucker. In that connection, whose duty would it be to see that 
the act of the legislature was enforced ? 

Mr. Todd. The attorney-general's, who is the head of the law de¬ 
partment. 

Mr. Rucker. He is the law officer of the island? 

Mr. Todd. Yes, sir. 

Mr. Rucker. Is he an American? 

Mr. Todd. An American; yes. 

Mr. Webber. Who appoints the officials who go there? 

Mr. Todd. The President of the United States. 

Mr. Page. Their appointments are confirmed by the Senate of the 
United States. 

Mr. Todd. By the Senate of the United States; yes, sir. 

To show you how things are conducted down in Porto Rico, I will 
say that in the brief period of civil government which we have had 
since the 1st of May, 1900, we have had 3 governors, 3 secretaries, 5 
attorneys-general, 5 auditors, 3 commissioners of education, 3 commis¬ 
sioners of the interior, and 2 treasurers. 

The Chairman. Five attorneys-general in five years. 

Mr. Todd. In five years, and every one of them has brought down 
his own ideas and his own laws from the particular State from which 
he came; and you will, therefore, find the laws of Porto Rico con¬ 
stantly changing to suit the ideas of the gentleman who is occupying 
the office of attorney-general. 

Mr. McKinlay. Well, have you not the laws of Porto Rico codi¬ 
fied ? How can the attorney-general interpret them according to his 
own ideas? 

Mr. Todd. The laws are codified, but amendments are presented 
every year. 

Mr. McKinlay. Does not the attorney-general try to interpret the 
laws by the records of the supreme court ? 

Mr. Todd. But these are not published. 

Mr. McKinlay. Do you mean to say that they are not published at 
all? 

Mr. Todd. Typewritten copies are made. 

Mr. Page. Have these attorneys-general resigned, as a rule? 

Mr. Todd. I will bring down the record from the. first one. The 
first attorney-general, Mr. Russell, did not last more than two or 
three months. He resigned and went home. Then Mr. Harlan, a 
verv nice man and a son of Justice Harlan, was appointed. He re¬ 
signed, of course. Then came Mr. Sweet, from Idaho, and he also 
resigned. Then followed Mr. Stewart, who resigned after serving 

35815—08-6 


82 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

two months, and now r we have the last man, Mr. Feuille, w T ho was 
just appointed. 

Mr. Page. Do you know the causes of their resignations ? 

Mr. Todd. The first two gentlemen had business enough in the 
United States to keep them occupied, and they did not want a posi¬ 
tion in the Tropics paying only $4,000. I suppose that any good 
lawyer can get more than that in the United States, and it is, there¬ 
fore, not necessary to go down to Porto Rico to earn a salary like 
that. 

Mr. Page. You think that these frequent changes have been due to 
the small salary paid ? 

Mr. Todd. Yes, sir. 

Mr. Rucker. One was requested from Washington to send in his 
resignation % 

Mr. Todd. Yes, sir. 

The Chairman. On account of drunkenness? 

Mr. Todd. Yes, sir. 

Mr. Rucker. And the others, I understand, resigned voluntarily ? 

Mr. Todd. It appears that way. 

The Chairman. You say “ appears.” I want you to feel perfectly 
free to tell all the facts as you know them to be without regard to 
anybody. What this committee desires is to know the truth. I do 
not want you to feel at all restrained. 

Mr. Todd. I do not feel at all that way. When I am doing my 
duty I want to do it the best way I know how. 

Mr. Weber. Were the other attorneys-genera 1 drinking men? 

Mr. Todd. With the exception of the one who was asked to resign, 
I know of no other. I do not know whether this one’s resignation 
was asked, or whether he presented his resignation himself, on 
account of his being intoxicated. I think not. He would drink, as 
gentlemen sometimes do. 

Mr. Webber. Were the other attorneys-general drinking men? 

Mr. Todd. They drank as any ordinary man would drink, but they 
did not get drunk. 

Mr. Rucker. They would take an occasional drink, but were not 
drunkards. 

Mr. Todd. I would like to make a statement here as to certain 
assertions that have been made now and then by different gentlemen 
occupying official positions up here and in Porto Rico, to the effect 
that the Porto Ricans do not know how to be fully thankful to the 
United States for the kind of government which was enacted for 
them by Congress in 1900. And I wish to state in the name of the 
Porto Ricans—and I think that I am authorized to do so—that this 
is not a right statement. 

The Porto Ricans fully understand and are grateful and'thankful 
to the United States people for the kind of government which was 
enacted in 1900, because they appreciate that working in the dark, 
as was the Unified States in regard to these Latin-American countries 
that came under her control in 1898, this organic act for Porto Rico 
was only a sort of probationary law, and that the full and honest 
intention of the United States was of enlarging our self-government 
in the future, if we should prove that we were capable of self-govern¬ 
ment. There is a feature in this act, this organic act of ours, which 
provides for the generous gift from the United States Government 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 83 

regarding the customs and internal revenues for the use of our 
machinery of governmerit down there, instead of coming into the 
United States Treasury. 

I suppose that it is to this that the gentlemen refer when they 
speak of the Porto Ricans being ungrateful to the United States. 
In other words, it seems that they think that we Porto Ricans should 
be quiet, and not say anything at all about what we call our mis¬ 
fortunes in having the executive council behave as it behaves down 
there, just because we are given the customs duties and the internal 
revenue income for our expenses. 

Now, I think I said in one of the previous .hearings that time and 
^lgain, in every legislative session, the Porto Ricans have always tried 
to reduce the expenses of government, and, strange to say, the execu¬ 
tive council has always opposed that just demand. Now, the last 
budget of the Spanish days was four and one-half million pesos. 

A peso was 60 cents, as all of you gentlemen know, but out of 
those four and one-half million pesos we had to pay the army, the 
navy, and the church, and another part would go to pensions, and 
another part also to support the office of the secretary of the col¬ 
onies in Spain. Now that we do not have to pay the army and 
navy, and have no pensions, and do not have to support any office in 
Washington, we do not see why, year after year, our expenses should 
be increased, and we should have a budget larger in proportion than 
we had in Spanish times. 

The Chairman. Will not the amount of money appropriated for 
schools account for some of that ? 

Mr. Todd. No, sir; it does not. 

Mr. Jones. Or for roads? 

Mr. Todd. No, sir. We have been building roads with the money 
resulting from the generous act of Congress in returning the two 
million dollars to Porto Rico. 

Mr. Fuller. Well, what makes the expenses? 

Mr. Todd. Too many salaries. 

Mr. Fuller. The expenses of officers? 

Mr. Todd. Yes, sir. We Porto Ricans think that if we had more 
control over the legislative assembly, that if we had the responsi¬ 
bility of running our own government, we could reduce our expenses 
by nearly a half a million dollars. 

In regard to this money coming from customs and from internal- 
revenue taxes, we think that if the United States people are going to 
continue to grant us that money we Porto Ricans ought to try to 
have the machinery of our government run by simply direct taxa¬ 
tion, and apply that money to the public improvements and schools. 

Every time we have tried to reduce the budget we have been told 
by the American gentlemen in, the executive council, “ No, you can 
not touch the salaries; you can not touch any of our officers; if you 
want to reduce expenses you may cut down the appropriations for 
schools and those roads and public works of other kinds.” But we 
say the contrary; if we are to cut down the expenses we must cut 
down the salaries of officers. 

Mr. Kinkaid. Do you know just what the salaries amount to annu¬ 
ally ? 

Mr. Todd. Well, there are the salaries fixed by the organic act, but 
we can not touch them. 


84 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


Mr. Kinkaid. What do they aggregate? 

Mr. Todd. The governor gets $8,000; the next man is the treasurer, 
who gets $5,000. Of course he has to give a heavy bond- 

Mr. Kinkaid. Without going into detail, do you know the aggre¬ 
gate? 

Mr. Todd. I can not tell you the exact figure; I can tell you the 
exact figures of the budget. * 

Mr. Kinkaid. You think that the expenses could be reduced hair 
a million dollars. Does that not represent the salaries ? 

Mr. Todd. Yes, sir. 

Mr. Rucker. I understand that the salaries in the organic act are 
not complained of. 

The Chairman. Let me read, right at this point, the salaries pro¬ 
vided by the organic act: 

The governor, eight thousand dollars; in addition thereto he shall be 
entitled to the occupancy of the buildings heretofore used by the chief execu¬ 
tive of Porto Rico, with the furniture and effects therein, free of rental. 

The secretary, four thousand dollars. 

The attorney-general, four thousand dollars. 

The treasurer, five thousand dollars. 

The auditor, four thousand dollars. 

The commissioner of the interior, four thousand dollars. 

The commissioner of education, three thousand dollars. 

The chief justice of the supreme court, five thousand dollars. 

The associate justices of the supreme court (each), four thousand dollars. 

The marshal of the supreme court, three thousand dollars. 

The United States district judge, five thousand dollars. 

The United States district attorney, four thousand dollars. 

The United States district marshal, three thousand five hundred dollars. 

That the provisions of the foregoing section shall not apply to the municipal 
officials, etc. 

Mr. Kinkaid. Wdiere will you save the half-million dollars aside 
from the salaries? In what other expenditures could the saving be 
made? 

The Chairman. Do you think they have more clerks there than 
they need? 

Mr. Todd. Yes, sir; in the different departments. In the depart¬ 
ment of education the legislature will appropriate every year money 
for the buying of books, and when the school year is over those text¬ 
books are destroyed, and the next year another appropriation must 
be made to buy more text-books. W 7 e do not see the necessity for 
destroying the text-books if they are in good condition. 

Mr. Rucker. Are they destroyed by act of the legislature or by the 
children ? 

Mr. Todd. By the department of education. 

Mr. Kinkaid. Do they buy a new series of text-books by some other 
authors ? 

Mr. Todd. They buy those of the same authors. 

Mr. Kinkaid. The others are old; they condemn them ? 

Mr. Todd. Yes, sir; they condemn them. Every new commissioner 
that comes to the island brings with him new ideas as to text-books. 

It was only last evening a, lady here in Washington asked me about 
a school text-book in English which she saw while on a short visit 
she made to Porto Rico. She wanted to know whether a mistake 
she noticed was a misprint or a bad translation of the phrase. She 
referred to a phrase which read, “ Dip your nose in the ink.” I 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 85 

could not explain what it was. Of course, if there was such a text¬ 
book it ought to be destroyed. 

Mr. Ivinkaid. Do you think that the book trust has anything to do 
with this state of affairs ? 

Mr. Todd. I do not know, sir. 

The Chairman. Will you please say in what sort of a book the 
“ Dip-your-nose-in-the-ink ’* phrase appeared ? 

Mr. Todd. I do not know; I did not see the book. The lady had 
occasion to see a schoolboy on the street when she was on her way to 
the steamer. She called him and took his books and examined them 
in order to see what kind of books he was studying, and she happened 
to come across this phrase, and she was so impressed by it that she 
wanted to know what it was. 

Mr. Webber. What is the Spanish word for 44 pen? ” 

Mr. Todd. 44 Pluma.” 

Mr. Rucker. What is the Spanish word for 44 nose ? ” 

Mr. Todd. 44 Nariz.” 

The Chairman. Who has directed the destruction of these books 
and the buying of new ones—the executive council or the man at 
the head of the department? 

Mr. Todd. The commissioner of education, himself. He is at the 
head of the educational department. 

Mr. Rucker. Those books, of course, during the school year are dis¬ 
tributed all around the island where the schools are. Now, then, 
when they are subsequently destroyed, how are they gathered to¬ 
gether ? 

Mr. Todd. Every school district has what they call a 44 supervisor.” 
He is an American. 

Mr. Rucker. And he goes around and destroys the books ? 

Mr. Todd. He goes around and gathers them up, and sends them 
over to San Juan to be destroyed. 

Mr. Rucker. Does he gather them from the individual children or 
from the schools? 

Mr. Todd. From the schools. 

Mr. Jones. Is not the alleged reason for this a sanitary one; to pre¬ 
vent the spread of disease ? 

Mr. Todd. Probably. There must be some reason for it. 

Mr. Jones. Is not that reason alleged, so far as you know ? 

Mr. Todd. Yes, sir; that is one of the reasons alleged; and another 
is that each of the commissioners of education has his own ideas re¬ 
garding text-books. 

Mr. Rucker. Would it not be more essential to destroy the cloth- 
ing ? 

Mr. Jones. They do not have an^ clothing. 

Mr. Todd. I beg your pardon, sir, but they do. A person going 
down to Porto Rico from the United States takes a camera along, 
but he is not going to photograph Mr. Larrinaga or myself. He pho¬ 
tographs a colored man in the street or one of the poor peons without 
shoes. He brings those pictures back to the United States, and then 
the opinion is that everyone in Porto Rico dresses that way. 

Mr. Jones. No ; I have been down there, and I can testify to what 
Mayor Todd says. 

The Chairman. Do the poor people of the island find the buying of 


86 HEABING BEFOBE HOUSE COMMITTEE ON INSULAE AFFAIRS. 

the new books a financial burden? Do you think that debars them 
from sending their children to school? 

Mr. Todd. No, sir; the department of education pays for the books. 

The Chairman. How much of the budget of last year do you think 
was devoted to the purchase of schoolbooks ? 

Mr.. Todd. Mr. Chairman, I would not like to be quoted as to the 
exact figures, but I know that the amount goes up to several thousands 
of dollars every year. 

The Chairman. How much of the budget was devoted to general 
school purposes ? 

Mr. Todd. About six hundred thousand dollars. 

The Chairman. Do you think that if the executive council were • 
made purely elective that the legislature of Porto Rico would, by 
direct taxation, provide fully for the public schools ? 

Mr. Todd. Yes, sir; and we would increase that amount to about a 
million dollars. We think that we should spend at least one million 
dollars a year for school purposes. 

The Chairman. Speaking generally, do you think that the great 
mass of the Porto Rican people are in sympathy with the public- 
school system ? 

Mr. Todd. Yes, sir. We would make education compulsory down 
there, and it would be acceptable to the people if we only had the 
means of providing schools for all the children. I am going to say 
further, that we will have to admit that with the change of the flag 
education in Porto Rico changed completely for the better, but we can 
not admit that this is wholly attributable to the Americans. If we 
had followed the methods and teachings of the office of the commis¬ 
sioner of education, education would not have taken such an increase. 
We think that it is due more to the local boards of education in every 
town of the island, which are made up entirely of Porto Ricans, that 
we have had such an increase of schools and school attendance. 

Now, in San Juan, for instance, I know that every year there is a 
tendency on the part of the board of education of that city to increase 
the number of schools, and provide for greater accommodations for 
the boys. But it is an uphill proposition when we have to do it, be¬ 
cause we have to contend with the department of education. 

Mr. Rucker. You say “ for the boys.” Do not both sexes go to the 
schools ? You mean both, do you not ? 

Mr. Todd. Yes, sir; both. 

Mr. Webber. How far are they taken in education down there— 
mathematics and languages? Have they schools for teaching the 
higher mathematics? 

Mr. Todd. Yes, sir; we have two high schools down there, one in 
San Juan, and one iq Ponce. They give diplomas, just as in any 
other high schools. 

Mr. Webber. There are no colleges there? 

Mr. Todd. There is no college. There is a so-called “ University of 
Porto Rico, and that is another way m which we could save ourselves 
thousands of dollars. It is only a mockery to have a university in 
Porto Rico. We are spending money in salaries and for a janitor 
while there is no such thing as a “ University of Porto Rico.” 

Mr. Kinkaid. What is lacking in the university—scholars 2 

Mr. Todd. Everything. If the country is going to maintain a uni- 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 87 


versity, we must have more public schools before we can have the 
boys to attend it. 

Mr. Kinkaid. You think perhaps, that it would be an advantage 
for the young men to attend universities in the United States ? 

Mr. Todd. Yes, sir. 

Mr. Webber. Do you mean to say that they have janitors and noth¬ 
ing to sweep? 

Mr. Todd. No ; we have a so-called “ university.” It is in the law, 
but there is no university whatever. 

Mr. Webber. Are there persons drawing salaries? 

Mr. Todd. Wherever you find such a thing there is somebody draw¬ 
ing a salary. 

Mr. Webber. How much of the budget is devoted to these salaries ? 

Mr. Todd. Mr. Larrinaga just tells me that the first year it 
amounted to $20,000, more or less. 

Mr. Webber. How many pupils do they have? 

Mr. Todd. None whatever. 

Mr. Webber. Was the $20,000 paid for salaries to teachers who 
taught nobody? 

Mr. Todd. Mr. Larrinaga, will you tell us about that? 

Mr. Larrinaga. As the mayor has very justly said, there is no such 
thing as a university. The amount of $20,000 was, I think, appropri¬ 
ated for the university in order to buy some land from somebody who 
had failed. 

Mr. Parsons. You say that some lands were bought? 

Mr. Larrinaga. Yes, sir; there was a building constructed there 
for the normal school, but with the name of “ university ” the people 
of Porto Pico have been made to believe that in there—in that same 
building where the normal school is—there is something like the 
University of Porto Pico. But there is no teaching in the university; 
there is nobody there; there are no pupils. 

The Chairman. You said, Mr. Larrinaga, that they bought some 
land from somebody that failed? 

Mr. Larrinaga. Yes, sir; around the university—around the nor¬ 
mal-school building which had been built for normal-school purposes, 
and that was named the “ university.” Every year thousands of 
dollars have been appropriated, and we have not seen anything of the 
university. I believe that lately- 

Mr. Parsons. Has that $20,000 been simply appropriated, or has it 
been- . , 

Mr. Larrinaga. Simply appropriated. It has to be used, and the 
University of Porto Rico is simply a myth—it never existed. 

Mr. Page. Nominally, then, there are officers, professors, and other 
attaches of the university ? 

Mr. Larrinaga. Yes, sir. 

Mr. Pucker. Are the teachers in that school Americans or native- 

born ? . 

Mr. Larrinaga. Both. There are two or three Porto Ricans. 

Mr. Pucker. The Porto Picans are learning the American customs. 

Mr. Smith. Where is that university located ? 

Mr. Larrinaga. It is about 7 miles from San Juan, on the left- 
hand side of the military road as you enter the town of Pio Piedras— 
the first town you reach when you leave San Juanr 


88 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Smith. On the way to Ponce ? 

Mr. Larrinaga. On the Ponce road; yes, sir. 

Mr. Kinkaid. Are there any reports made by the officers of the 
university as to what they do or do not do ? 

Mr. Larrinaga. 1 believe that something of that kind is stated in 
annual reports, but we do not see anything tangible of it. 

Mr. Kinkaid. Do they solicit or advertise that they are ready to 
take scholars ? 

Mr. Larrinaga. No, sir. 

Mr. Kinkaid. Do you mean to say that $20,000 are paid every year 
to people who are not doing any work ? 

Mr. Larrinaga. I know that that sum was once appropriated, and 
I know also that some thousands of dollars were appropriated later. 

Mr. Kinkaid. Do you know whether or not any professors remain 
at the university ? 

Mr. Larrinaga. They are professors of the normal school. 

Mr. Fuller. Is the normal school in operation ? 

Mr. Larrinaga. Yes, sir. 

Mr. Fuller. The university is a ring within a ring? 

Mr. Larrinaga. The normal school is a reality. 

Mr. Rucker. Do these teachers get paid for their normal-school 
work, and also for their connection with the university ? 

Mr. Larrinaga. Some of them. 

Mr. Rucker. To the extent of this appropriation ? 

Mr. Webber. They get away with the $20,000 in some way. 

Mr. Kinkaid. Was this $20,000 for the university, or partly for the 
university and partly for the normal school ? 

Mr. Larrinaga. It was exclusively for the university, for the buy¬ 
ing of lands and the payment of salaries. 

Mr. Kinkaid. The professors of the university teach in the normal 
school, do they? 

Mr. Larrinaga. They teach only in the normal school, and they 
are supposed to teach in the university. 

Mr. Kinkaid. Are they paid salaries for teaching in the normal 
school distinct from those for teaching in the university ? 

Mr. Larrinaga. I can not say so. 

Mr. Kinkaid. May it not possibly be true, then, that they are earn¬ 
ing the salaries which are paid them for teaching in the normal 
school ? 

Mr. Larrinaga. When we see so much informality about the whole 
business we may be led to believe that there is something of that kind. 
I would not affirm anything as to that. 

Mr. Kinkaid. You do not know certainly how that is? You have 
never investigated ? 

Mr. Larrinaga. There is so much mystery that the public does not 
know anything about it, but there is a popular suspicion, I believe, 
that the professors are being paid salaries that they are not earning. 
That is the case. Some people are inclined to believe that some sala¬ 
ries are not very fair. 

Mr. Kinkaid. But there has never been any investigation made ? 

Mr. Parsons. Suppose a university was to be constructed, was this 
land purchased for $20,000 suitable for a university ? 

Mr. Larrinaga. Yes, sir; because it is used for normal school pur¬ 
poses. The whole thing was intended for the normal school. I sup- 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 89 

pose that the professor of agriculture improves those lands and uses 
them for teaching his pupils. 

Mr. Parsons. There was no objection to the purchase of the lands, 
was there ? 

Mr. Larrinaga. We kfiew nothing about it. Nobody was con¬ 
sulted. 

Mr. Parsons. Is there any objection now? 

Mr. Larrinaga. I believe there would be. 

Mr. Parsons. Is it because the lands are good for no other purpose? 

Mr. Larrinaga. I really could not tell you. I surveyed the lands. 
I am a civil engineer, and as I spoke English they called me and I 
went to survey the land for the party who wanted to sell it—a 
native Porto Rican; and as the other party was an American I was 
called in to make the survey. The lands were very close to 100 acres, 
and, from what I could see, they were good for almost nothing, possi¬ 
bly for sugar-cane culture or for minor fruits. Orange trees had 
been planted, and there are some orange groves there, but I do not 
believe that the cultivation of oranges there would be successful. 

Mr. Parsons. Did the Government buy direct from the Porto 
Rican ? 

Mr. Larrinaga. What we have been told has been very little, either 
officially or in private. All of our information on this subject has to 
be taken with some discount as to its accuracy. 

Me. Parsons. Do you know the price the Porto Rican got for the 
land? 

Mr. Larrinaga. I believe it was $4,000. I had some business in 
connection with that transaction, and I recollect that it was $40 an 
acre. In making an accurate survey of the lands, I believe there 
were two or three acres less than tlie 400. If my memory serves me 
aright, the price paid was, as I have said, $40 an acre. 

Mr. Parsons. And that was a fair price? 

Mr. Larrinaga. Yes; of course. 

The Chairman. Mr. Mayor, I think we will resume your testimony. 

Do you know whether any gentleman having in charge a bureau 
of education was connected with the authorship of any schoolbooks 
which were used there ? 

Mr. Todd. My personal knowledge would not lead me to think that. 
I do not know anything about it from personal knowledge, with the 
exception of what I have seen written in the papers and never 
contradicted. 

The Chairman. What have you seen written in the newspapers 
that has never been contradicted ? 

Mr. Todd. It was written two months ago in a series of articles 
in Harper’s Weekly, of New York, by a man sent down to Porto Rico 
expressly to write about that country, that the first commissioner 
of education we had in the island imposed upon the people of Porto 
Rico his own text-books for the schools, and it has been alleged in 
those articles that he received a percentage of the price paid for 
these books. 

The Chairman. You mean the books of which he was the author? 

Mr. Todd. Yes, sir. I know that the next commissioner of educa¬ 
tion destroyed those books when he got there, as I have before men¬ 
tioned, and bought other kinds of books. 

The Chairman. Was the second kind in turn destroyed? 


90 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Todd. Yes, sir. 

The Chairman. And still another kind adopted ? 

Mr. Todd. We have had three commissioners-of education. 

The Chairman. And you have had three different kinds of text¬ 
books in five years ? 

Mr. Todd. Probably more than that, because we have had five years 
of civil government, and although we have had only three commis¬ 
sioners of education, the books have probably been destroyed every 
year. 

Mr. Rucker. They were destroyed every year, you think ? 

Mr. Todd. Yes, sir. 

Mr. Webber. Is this commissioner of education elected or appointed 
by the President? 

Mr. Todd. He is appointed by the President. 

Mr. Webber. The commissioners of education have all resigned? 

Mr. Todd. They have all resigned. 

The Chairman. Do you know of any official who has been sent 
down from the States whose resignation was demanded, excepting 
only the drunken attorney-general ? 

Mr. Todd. I do not know of any. As Mr. Larrinaga said regard¬ 
ing another subject, we are kept in the dark on those matters. Not 
even the native members of the executive council, who are supposed 
to be men who have the confidence of the government, know about 
these things. 

The Chairman. Who are the native Porto Rican members of the 
executive council now ? 

Mr. Todd. I will give their names by their rank, according to the 
fime they have been members of the council. They are Mr. Andres 
Crosas, Dr. J. C. Barbosa, Dr. R. del Valle, Mr. L. Sanchez Morales, 
and Mr. H. Diaz Navarro. Those are the five gentlemen. 

The Chairman. Are they gentleman of high standing in Porto 
Rico? 

Mr. Todd. Yes, sir; they are gentlemen of high standing. But I 
will have to say that with the exception of three of these gentlemen, 
the other two—and I would not care to mention their names—if their 
names were put up for election for the positions they now occupy, or 
even for any other position which would require a vote of the people, 
they would receive only the votes of their intimate friends and their 
relatives. 

Mr. Rucker. That is two of them, or three of them ? 

Mr. Todd. Two of them. Of course they have been recommended 
by the governor of Porto Rico, and he knows why he has recom¬ 
mended them. I do not refer to the present governor, I mean other 
governors also. 

The Chairman. Do you think of any other department or bureau 
of the government where the expenses could be curtailed ? 

Mr. Todd. Yes, sir; in every department. 

The Chairman. Without detriment to the public service ? 

Mr. Todd. Yes, sir. I think that when a man receives a salary, he 
is supposed to work to earn that salary, no matter in what capacity he 
may serve. The President of the United States has to work for his 
salary. I could mention some officials in Porto Rico whose entire day, 
with the exception of a half an hour, which is given to public business, 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 91 

is occupied in writing articles for newspapers or magazines. I think 
that that is robbing the people of the amount of their salaries. 

And these same gentlemen will have an assistant, who, unfortu¬ 
nately, is an American also, getting $2,500 a year, and this man is also 
supposed to work, but he requires a chief clerk, who in very few cases 
happens to be a Porto Rican. Now, I think that if this head of a 
department is going to have an assistant, this assistant ought to be 
the chief clerk; so that you see right there we could save some money; 
and we have five assistants at $2,500 each and also many chief clerks. 

Mr. Fuller. Then the men who are the chief clerks do the work? 

Mr. Todd. Yes, sir. 

Mr. Page. Your point is that there is a multiplication of officials? 

Mr. Todd. Yes, sir; a multiplication of officials. 

Mr. Page. And, of course, salaries? 

Mr. Todd. Yes, sir. There was a gentleman in one of these posi¬ 
tions who has resigned lately, and he stated publicly, when he was 
appointed, that he intended to remain in office only for a few months 
so as to make a saving and cut down salaries. He did cut down 
salaries, and he was at the head of one of the largest departments 
there. But it was very well noted by everybody that none of the 
salaries which he cut down was that of a single American. Every 
man he put out of office was a Porto Rican—small officials, of course. 
There is also the treasury department which could be cut down in 
salaries. 

The Chairman. Here is the Register of Porto Rico; would that 
assist you any ? The Register of Porto Rico, containing a list of the 
officials of the island. 

Mr. Rucker. I want to ask about another matter. How is the 
island watered ? Have you rivers or streams ? 

Mr. Todd. Yes, sir; and waterworks in all the principal cities. 

Mr. Rucker. Are there any wells sunk? 

Mr. Todd. Yes, sir. 

The Chairman. Mr. Larrinaga, in the matter of water supplies in 
the island, how is it in the mountains, are there any waterfalls? 
Could electricity be developed? Will you tell how the franchises 
have been issued ? 

Mr. Larrinaga. Yes, sir. As I informed the committee the other 
day, the island has a range of mountains going from east to west. 
Numerous rivers and rivulets come down both to the south and to 
the north coasts. Porto Rico is very well watered. In the rivers 
going down from the mountains, numerous water powers in the 
heights are worked to prepare the coffee in the south part of the 
island, which is the most subjected to the dry season. Many of those 
are used for irrigating purposes. 

In olden times many concessions for water for what we call “ de¬ 
viation of water for irrigating purposes ” were granted over this end 
(indicating on map] down to Mayaguez, where there is not so much, 
because it runs more in the western part of the island. In the north¬ 
ern part, where it runs much more, they are not used much for irri¬ 
gating purposes. They are used more for water power in the heights. 

This is one of our complaints against the workings of the execu¬ 
tive council. In old times the matter of obtaining a concession for 
developing any of the natural resources of the country was one of 


92 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

only a few months. The law, in fact, was quite liberal. But now, 
in the seven years that we have had American occupation we have 
not succeeded in having any of the large natural water powers de¬ 
veloped and converted into power for light or for anything else 
useful to the community. There have been several applications for 
such concessions, and yet the executive council has managed in such 
a way that up to the present time, including what I read in the Porto 
Rican papers which reached me, I have heard of no important con¬ 
cession being granted. 

There have been many applications for franchises here through 
the southern part of the island [indicating on map], but none has 
been granted. A very large water power right here south of San 
Juan [indicating on map] was asked for for many years, but never 
been granted, the refusals being based on different grounds. Finally, 
the executive council granted this franchise as it appeared under the 
terms of the law. But, in fact, the executive council has had no law 
by which to be guided. 

The principal reason that capitalists do not go to the island to 
build such works, or that even native capitalists do not do so, is that 
the conditions imposed by the executive council in connection with 
the development of the water forces are very onerous. They ask a 
large percentage of the gross income of the whole enterprise, while 
the old law demanded nothing of this kind, and, in addition, ex¬ 
empted the property from taxation for a good many years, so as to 
help the concessionaries. 

Finally they succeeded in having a concession granted for one of 
those large water powers, but nobody knew where it came from. Tt 
was supposed, under the law, that the applicants were to make a cash 
deposit, and that after the concession was granted to give bond or 
securities for the carrying out of the work. It seems that they have 
never gotten that cash back. I am sorry to have to speak about this, 
as I will honestly say that I was interested in one of the applications. 
I was the civil engineer for one of the men who failed. The fact 

of the matter is that the concession was made to a bogus company_ 

if that is the proper word. Everybody knows that the cash deposit 
was returned to those gentlemen, who had not complied with the 
conditions of the agreement. 

A concession was granted for the construction of a railroad from 
San Juan to Ponce. When the concessionaires failed to build the 
road they were granted another extension of time, and then, I believe, 
a third extension was granted. Finally, they failed to carry out the 
agreement, and the franchise, of course, was canceled, but the $10,000 
has never been sent back to the treasury of Porto Rico, and the 
$100,000 bond has vanished, and there is no responsible party to give 
an accounting of that money up to the present day. 

The Chairman. Do you say that the people who had secured that 
franchise deposited a bond for $100,000 to secure the carrying out 
of the franchise according to its terms ? 

Mr. Larrinaga. Yes, sir; and $10,000 cash. 

The Chairman. And that the $10,000 was returned to them and 
that the bond has disappeared ? 

Mr. Larrinaga. Entirely; and no responsible party has been found 
to make that amount good, while under the old law everybody who 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 93 

deposited a dollar there lost it for the benefit of the treasury of the 
island when they failed to carry out the conditions of the franchise. 

The Chairman. When you say the “ old law do you mean under 
Spanish dominion? 

Mr. Larrinaga. Yes, sir. It was not only a Spanish law, but it 
was enforced for some time under the American regime. 

The Chairman. Are there any hot springs in the island ? 

Mr. Larrinaga. Yes, sir. There are two of importance—one at 
Guayama, which is known as the Guayama spring, and is very much 
favored by Americans there as well as by the Porto Ricans; and 
there is one at Caguas. There is a large hotel there, with modern 
facilities. 

The Chairman. Under the Spanish regime was that property un¬ 
der the control of the Government ? 

Mr. Larrinaga. No, sir. From time immemorial it has belonged 
to a wealthy family there. 

The Chairman. And they still retain the ownership of it? 

Mr. Larrinaga. Yes, sir. Mr. Chairman, I would like to make a 
statement concerning a point which the mayor has treated so well. 
I think that I can add some information to it concerning the execu¬ 
tive council. May I be permitted to go back to that point? I con¬ 
sider it a very important one. 

The Chairman. Yes, sir; proceed. 

Mr. Larrinaga. When civil government was first put in operation 
in the island, six officials were appointed by the President of the 
United States, who were to be members of the executive council. 
These six officials were supposed to hold office for four years. They 
were appointed for that period of time, and they were supposed to 
hold their offices for that period. 

None of them have died; none of them have been so sick as to be 
obliged to leave on account of ill health, as far as I know, and yet 
during the first four years of civil government about twenty officials 
went there, so that, on an average, they were there only about eighteen 
or nineteen months each. Deducting from this time the little vaca¬ 
tions they took every year, as a rule—some took two vacations, and, I 
believe, there have been some instances where three vacations were 
taken; in those nineteen months those gentleman had to go there and 
learn the laws of Porto Rico—the Porto Rican laws are different 
from yours—they had to learn the customs of the country, and, of 
course, to become acquainted Avith the real wants of the country. We 
Porto Ricans feel that to do this is an impossibility, though there 
may be some superior men sent there who can accomplish all that in 
such a short space of time. 

But the average run of men can not do that and successfully gov¬ 
ern a people for whom they vote the taxes. They appropriate the 
money, they collect the taxes with their own officials, and they spend 
the moneys thus collected, sometimes in such a way as that in the 
case of the university, about which you have heard this morning. 
Referring to the matter of the budget, if you had it before you you 
could readilv find out where the whole of the money goes, with "the 
exception of that of which the mayor was speaking a few minutes 
ago. You would find some items for so many thousands of dollars 
for horseshoeing—for shoeing the horses of the numberless inspectors 


94 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

of internal-revenue taxes scattered all over the island. Their salaries 
are excessive, their number is excessive, and their zeal is excessive, 
according to the general opinion of the people. 

Mr. Gilbert. Are you able to state in general terms what are the 
revenues of the island from importations? 

Mr. Larrinaga. I can not tell you that, but I think that the mayor 
may be able to give you the figures. 

Mr. Todd. The official figures of last year puts that amount at over 

$ 600 , 000 . 

Mr. Larrinaga. My reason for not being able to give these figures 
is that they are changing every day. The moneys derived from the 
generous act of the Government of the United States in returning to 
the treasury of Porto Rico the importation duties have very fast been 
disappearing. We are importing a good deal of merchandise through 
the port of New York. Those goods that we import from Europe, 
instead of coming direct to Porto Rico, come by way of New York. 
The duties are paid at New York, and are turned over to the Treas¬ 
ury of the United States, and then the goods come free of duty to 
Porto Rico. The merchants claim—and I will give this fact as I 
have it—that they are compelled to do that, because the merchandise 
coming from Europe has to pay duty, and the officials are so strict, 
and there is so much “ red tape ” about it, that sometimes the mer¬ 
chandise rots in Porto Rico before the merchants can get it. 

Sometimes when they get ten cases of goods it takes twenty cases 
to put it back again after it has been unpacked. In fact, the mer¬ 
chants claim that the hindrances are so many that to avoid all that 
they get the goods from New York, and the day is not far distant 
when all importations from Europe will be done through the port of 
New York. 

Mr. Jones. You were talking about the manner in which the reve¬ 
nues were expended in Porto Rico and how you thought there could 
be savings made. I would be glad if you would go on with that 
subject. 

Mr. Larrinaga. It is this, that if you take every department—and, 
as the mayor has said, we are not speaking of the salaries fixed by 
Congress, because we think that these salaries are very reasonable for 
people who go down to the island from the United States to fill these 
positions—those heads of departments have appointed their own 
officials and have fixed their salaries, and we find them too high. We 
ought to have an economical government, not being a rich country. 

You will find in the budget many small items like that of horse¬ 
shoeing and the university affairs. You will also find in> every 
department a good many thousands of dollars that could be cut down. 

Mr. Jones. Can you mention any other instance of extravagance 
and waste in addition to the horseshoeing? 

Mr. Larrinaga. I can, sir. I know that sometimes too much ma¬ 
chinery for roads- 

Mr. Gilbert. Have you a suspicion that the item for horseshoeing 
was to cover up other items ? 

Mr. Larrinaga. I could not say that. I find that the appropria¬ 
tion is too large; that we could do without it, and that our own horses 
most of the time go without shoes. In the interior of the island, par¬ 
ticularly, they do not shoe their horses. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 95 

And I believe that there has been some unnecessary machinery 
bought at very high prices, while other machinery has been allowed 
to rust and rot. Take all the valuable machinery that we have for 
dredging the harbor of San Juan. If the work had been carried on 
on an economical footing we could have had a harbor at San Juan 
dredged deep enough for the largest ships of the United States to 
enter. That machinery has been allowed to rot there, and clerks are 
paid to look out for it, occupying very large storehouses, and at the 
end of five years the whole thing is worthless and has to be thrown 
away, although it was in good condition when the Americans went 
down there, and in spite of the efforts of the Porto Ricans to turn the 
machinery to good account. There has been something said about this 
in the house of delegates. 

Adjourned. 


AMENDMENT OF PORTO RICAN CIVIL GOVERNMENT 

ACT. 


Committee on Insular Affairs, 

January 1906. 

STATEMENT OF HON. FRANCES BUSO, MAYOR OF HTJMACAO, P.R. 

The Chairman. The Committee will please come to order. Mr. 
Buso, you are the mayor of what city ? 

Mr. Buso. Of Humacao, which is situated in the eastern part of the 
island of Porto Rico. 

The Chairman. How long have you lived in Porto Rico? 

Mr. Buso. I came back to Porto Rico from Spain in January, 1883, 
since which time I have alwa 3 r s«lived there. I have made three trips 
to the States; that is all. 

The Chairman. Now you may proceed, Mr. Mayor. You are here 
in what capacity? You represent whom? 

Mr. Buso. I am here representing the municipalities of Porto Rico. 
I was appointed to come here with Mayor Todd to bring our memorial 
to Congress, and to state facts to prove that we must ask for such a 
change of government as is set forth in the memorial. 

Nothing has been left for me to say. Mayor Todd has stated the 
facts truthfully and clearly. But there is one point about which I 
should like to speak. We have been publicly suspected by Americans 
that if we were granted a larger share of self-government we would 
act with too much favoritism. In this connection I believe that it 
will be well for me to mention one fact before this committee. 1 do 
not mean to accuse an} T official or any other person, but merely to state 
the fact. 

Every year a certain amount is appropriated to be placed at the dis¬ 
posal of the governor of Porto Rico to meet certain emergencies that 
may arise—for instance, in the event that a cyclone strikes the island, 
or something of that kind. Governor Hunt had a good sum of this 
kind appropriated before leaving the island. There was a widespread 
opinion that he wanted to help the assistant attorney-general, who, 
it was said, had been asked to resign his position. The governor 
inquired of him how much he would charge to be the lawyer in behalf 
of the people of Porto Rico. The gentleman answered that $12,000 
would be his fee. The secretary of Porto Rico knew that, and at a 
meeting of the cabinet he said that he would do this work for $500 less. 
An appropriation was made for him to receive $11,500 as a lawyer. 
We thought that there were plenty of lawyers who might act in behalf 
of the people of Porto Rico. 

We had an attorne 3 ^-general, an assistant attorney-general, a prose¬ 
cuting attorney at the supreme court, and furthermore we had five 
district attorneys, so that there were plenty of attorneys already in 
Porto Rico who were drawing salaries from the government, and we 
thought that the amount in question was too much mone 3 T to pay for 
this legal service. The secretary of Porto Rico resigned and was 
appointed attorney in the case. 

96 





HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 97 

xne Chairman. What do you think of the proposition to make the 
upper house of the legislature elective? 

Mr. Buso. Everybody in Porto Rico wants that, and everybody will 
be satisfied. It will meet the needs and the unanimous consent of the 
people there. As the governor will have the veto power and Congress 
the power to annul any wrong law we do not see how any harm can be 
done by granting us an elective upper house of the legislature. No 
law could be enacted without the approval of the governor and the 
consent of the American Congress. 

The Chairman. What is*the trouble, if any, now with the executive 
council ? 

Mr. Buso. Well, there is now the same trouble that there has always 
been, namely, an appropriation law drafted by the executive council 
is imposed on the house. In fact, the Porto Ricans have almost noth¬ 
ing to do with the law. The executive council has too powerful a 
control over the island. These two powers of the executive council, 
to act as executive officers and as legislators, is very troublesome. 

Mr. Hubbard. Your desire would be not so much to have these 
executive officers changed, as to leave them as purely executive offi¬ 
cers, and have the executive council elected as the upper branch of the 
legislature ? 

Mr. Buso. Our desire is to have what we consider the real Ameri¬ 
can method—not to allow the executive power to interfere with the 
legislative; to have these powers completely separate; and to have a 
legislature wholly elected by the people of Porto Rico. 

Mr. Hubbard. As it is now, your upper house is composed in large 
part of the executive council named here by the President? 

Mr. Buso. Yes, sir. 

Mr. Hubbard. Your desire would be to have those executive offi¬ 
cers—such of them as are named by the President, at least—not mem¬ 
bers of that council. 

Mr. Buso. Of course. We do not want the heads of departments to 
interfere with the senate. 

Mr. Crumpacker. Do you think that the citizens of Porto Rico are 
competent to vote intelligently, generally speaking? 

Mr. Buso. Yes, sir. 

Mr. Crumpacker. What are their habits of life? Are they sober 
people, or are they addicted to drinking intoxicating liquors? 

Mr. Buso. They are a sober people. In fact, it is considered a very 
shameful thing to be drunk. 

Mr. Crumpacker. Is there a good deal of drunkenness, or not 
much? 

Mr. Buso. Very little. 

Mr. Crumpacker. How about the gambling? Is there very much 
of that going on among the common people ? 

Mr. Buso. To some extent our people like gambling. 

Mr. Crumpacker. In what kind of gambling do they indulge? 
Card playing for money ? 

Mr. Buso. Card playing; yes, sir. 

Mr. Crumpacker. And as to their sports down there, do they have 
any cock fighting? 

Mr. Buso. They have no cockfighting. 

Mr. Crumpacker. No bullfighting? 


35815—OH-7 


98 v HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Buso. No bullfighting; the legislative assembly prohibited cock- 
fighting. 

Mr. Crumpacker. Are most of the people of Porto Rico members 
of the Catholic Church? 

Mr. Buso. Yes, sir. In fact, every Porto Rican is a Catholic, or 
was supposed to be a Catholic before the Americans went to the island. 
Although it may be hard for me to say such a thing, I do not think 
that there can be found all over the world a people with so little care 
for differences in religious beliefs. We never interfere with one 
another’s opinions. 

Mr. Crumpacker. What I wanted to know is, whether or not they 
have pretty clear ideas as to keeping religion separate from the 
government. 

Mr. Buso. Oh, yes. That is what I mean to say—that we never 
look to see what our neighbor’s opinions are as to religion. 

Mr. Crumpacker. Has religion any influence in voting for candi¬ 
dates ? 

Mr. Buso. No; none at all. 

Mr. Crumpacker. Are the people generally in favor of free schools— 
of public education ? 

Mr. Buso. The people do not care at all for sectarian schools. 

Mr. Crumpacker. Is there any opposition to free schools, accord¬ 
ing to the American standard? 

Mr. Buso. No opposition at all. 

Mr. Crumpacker. Are there any sectarian schools? 

Mr. Buso. No, sir. 

Mr. Crumpacker. What is the attitude of the clergy—the priests— 
upon that question? Is there any objection on the part of the priests 
to the free schools? 

Mr. Buso. I can not answer what the opinion of the priests would 
be, but I may say that the opinion of the public is completely inde¬ 
pendent of that of the priests. We do not care what the priests may 
say on the subject of schools. 

Mr. Crumpacker. Your schools are, of course, nonsectarian. 

Mr. Buso. Nonsectarian. There is not a single public school in 
Porto Rico which is sectarian. 

Mr. Crumpacker. And you think that the sentiment of people is 
largely that the nonsectarian character of the schools would be main¬ 
tained if the people of the island had free control of their own affairs? 

Mr. Buso. It would not only be maintained, but it would be highly 
appreciated. 

Mr. Crumpacker. Is there any prejudice or especial feeling between 
the races there—between the colored and the whites? 

Mr. Buso. No prejudice at all. 

Mr. Crumpacker. And the privileges of the bill are extended to all 
without regard to race or color? 

Mr. Buso. Oh, yes; without regard to anything of the kind. 

Mr. Crumpacker. You have, 1 believe, quite a large percentage of 
illiterates down there—that is, people who are unable to read and 
write. Are they as a rule people of pretty sturdy character? 

.Mr. Buso. Every American with whom I have spoken in Porto 
Rico has said that the Porto Ricans are very clever—among the most 
clever people in the world. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 99 

Mr. Crumpacker. A word as to the liquor business. Do you manu¬ 
facture spirits in the island ? 

Mr. Buso. We did manufacture a great amount of spirits in old 
times, but the revenue laws have reduced the business greatly. 

Mr. Crumpacker. Have you our internal-revenue system down 
there, so that it makes it rather expensive to manufacture spirits? 

Mr. Buso. Yes, very expensive. A great many distilling plants 
have been abandoned. 

Mr. Crumpacker. What effect has that had on the drinking on the 
part of the people? Is there as much drinking now as there was 
before—now that the prices are up? 

Mr. Buso. Very little effect. The people drink less, but not much 
less. 

Mr. Crumpacker. Do you make wines down there to any consider¬ 
able extent? 

Mr. Buso. No. In fact liquor is not used very much in Porto Rico. 
Rum was formally distilled in the island, but it was always exported. 

Mr. Crumpacker. The lower house or popular branch of your leg¬ 
islature has had a number of sessions already under the Foraker law, 
has it not? 

Mr. Buso. Yes, sir. 

Mr. Crumpacker. What is the temper of that branch of the legis¬ 
lature as a body? Do they transact business in good temper? 

Mr. Buso. In good temper; yes, sir. 

Mr. Crumpacker. Do they have a sufficient appreciation of the 
importance of submitting to the will of the majority in legislative 
matters ? 

Mr. Buso. Yes, sir. 

Mr. Crumpacker. If a man has a proposition and goes before the 
legislature and advocates it earnest^, and then loses out on account of 
having the majority against him, he submits gracefully, does he? He 
has that training in self control and self restraint that is necessary in 
a republican government, you think? 

Mr. Buso. Yes, sir. It is a fact that every man, during the discus¬ 
sion of a bill, tights as hard as possible for his own ideas, but when 
the vote is taken, then they submit to the vote of the majority, and 
they say, 44 Well, the assembly has enacted such a law.” 

Mr. Crumpacker. I suppose that the man who loses out goes out in 
the cloak room and swears a little. 

Mr. Buso. That is human. 

Mr. Crumpacker. Well, that is the proper way. 

The Chairman. Do you, yourself, know anything about the attorney- 
general who came down to Porto Rico in an intoxicated condition, and 
had to withdraw so soon after his arrival ? 

Mr. Buso. Yes, sir; I know about that case. Though nothing was 
said about this incident, of course we knew about it. There are 
certain points of difference between Americans and Latin races, and 
there are some officials who think that it is necessary to drink when 
one goes to such a hot climate as that of Porto Rico, and so we do not 
pay much attention to such things. We merely wanted to know if 
the gentleman was suitable for the position to which he had been 
appointed, regardless of the fact that he became intoxicated. I do not 
know that we had any opportunity to judge as to that. 


100 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

The Chairman. 1 suppose because he was drunk all the time that he 
was in the island. It may be truthfully said, Mr. Mayor, that the peo¬ 
ple of Porto Rico are a very temperate people, and always have been, 
so far as the use of intoxicating liquors is concerned; and, as you said 
a while ago, drunkenness is looked upon as a shameful thing? 

Mr. Buso. Yes, sir; it is looked upon as a shameful thing. Even 
if a person of the poorer class gets drunk, any respectable citizen will 
say to him, “You had better go home,” and he does so and does not 
give any trouble. Of course there are some exceptions, but they can 
not be spoken of as being the rule. 

The Chairman. I believe that the people of Porto Rico think that 
the expenses of the Federal court in the island ought to be paid out of 
the National Treasury instead of out of money that belongs to the 
island. 

Mr. Buso. As to this point, I can express only my own views. I 
have never talked with friends on this subject, and so 1 can only say 
that as we have the aid of the United States Treasury in certain direc¬ 
tions we think that if we are able to pay for these expenses we ought 
to do so. The} 7 are working down in Porto Rico and transacting busi¬ 
ness in Porto Rico, and most of the benefit is in behalf of the island, 
and we therefore think it ought to be thus. This is my present opin¬ 
ion, and I think it a fair one, and almost pvery Porto Rican thinks the 
same way. 

The Chairman. In that you disagree with an American who talked 
with me, who said that he thought that the Treasury of the United 
States should pay these expenses instead of that of Porto Rico. 

Mr. Buso. The man who gets the benefit of certain work ought to 
pa} 7 for that work. 

Mr. Page. That court is not in the nature of a supreme court. As 
I understand, it is not a Federal court. 

The Chairman. There is a United States district court in the 
island. 

Mr. Crumpacker. How are your local magistrates? Are they 
fairly honost men, and do they administer justice fairly? I refer to 
your lower courts. 

Mr. Buso. I believe that they are just as fair and honest as they are 
in any other country. As a rule they act with the best intentions. 
They may do wrong occasionally, but I believe that they try to act 
honestly. That is my opinion. 

Mr. Crumpacker. You think they are honest ancl impartial as a 
rule ? 

Mr. Buso. Yes, sir; as a rule. 

Mr. Crumpacker. You are mayor of a city, and are familiar with 
municipal administration in Porto Rico. Is there any complaint in 
any of the provinces or municipalities in relation to what we term 
“graft,” where officials interested in public constructions get rake ofls 
from men who secure favors from local governments? 

Mr. Buso. No, sir. If anything of that sort happens it is an 
exception. 

Mr. Crumpacker. Y ou think that the officials have an appreciation 
of their duty to the public, and that they will not permit their per¬ 
sonal interests to conflict with their duties as officers ? 

Mr. Buso. I think so. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 101 

Mr. Crumpacker. There is not much talk about “graft” down 
there, or “boodleism,” as we call it? 

Mr. Buso. No, sir; we do not have that sort of thing. 

The Chairman. Mr. Mayor, do you think of anything else that you 
wish to say to the committee? 

Mr. Buso. No, sir; but I will be glad to answer any questions that 
the gentlemen of the committee may wish to ask me, if 1 can. 

Mr. Page. 1 notice in this bill (No. 12076) which is submitted that 
you ask that the legislative assembly meet every year. That is the 
custom now, I suppose ? 

Mr. Buso. Yes, sir; that is the custom, and we believe that the leg¬ 
islative assembly should meet every year because an annual appropri¬ 
ation law is needed. We also think that this appropriation law should 
be brought up in the lower house only, so as to be, I may pay, from 
the people of Porto Rico. That is the reason why we believe that we 
should have an annual meeting of the legislative assembly. 

Mr. Hubbard. Part of your objection to the conduct of affairs by 
the executive council—a very large part of it—arises from the fact 
that there is no check upon their authority, owing to their remoteness 
from the United States; and that they are really responsible to no one. 
Is that not so? 

Mr. Buso. Yes, sir; that is the main reason. 

Mr. Hubbard. Another objection made by you to the present s} r stem 
is that those members of the executive council vvho do not- reside in 
Porto Rico, but are appointed from the United States, do not feel it 
their duty to complete their terms of service, but abandon their duty 
whenever they see fit, with the result that you have had no stable gov¬ 
ernment since the Americans went into the island? 

Mr. Buso. Yes, sir. 

Mr. Hubbard. Another part of your objection is that the very laws 
under which your government was organized have not been fully 
obeyed. For instance, under the law organizing the government of 
Porto Rico, the five Porto Rican members of the executive council were 
to share in all the business of that body. Suppose that the President, 
acting under the authority conferred upon him by the act of Congress 
of April 12, 1900, were to appoint a majority of the membership of 
that council from the Porto Ricans, would that remove a portion of 
your objection? 

Mr. Buso. No portion whatever. We are asking to have the execu¬ 
tive and legislative powers completely separated. We are not com¬ 
plaining against the Americans. We are complaining against the 
functions invested in these officials. We are not here to say that 
Porto Ricans are any better than Americans, although of course citi¬ 
zens of Porto Rico might be better acquainted with the island and its 
needs. I believe that the Porto Ricans would complain just the same 
as they are doing now were all of the eleven members of the execu¬ 
tive council Porto Ricans, if they had the same powers as are at pres¬ 
ent possessed by the American heads of departments. 

Mr. Hubbard. That, then, is the essential point of your complaint, 
is it not, that the legislative and executive powers are mingled; and 
that by reason of the fact that the American members of the executive 
council are in control it places in the hands of a certain part of that 
body the complete control of the island? 


102 HEARING BEFORE HOUSE COMMITTEE ON INSULAE AFFAIRS. 

Mr. Buso. Yes, sir; absolutely complete control. In fact, there are 
realty only six gentlemen legislating for Porto Rico. 

Mr. Hubbard. The matter relating to the occupancy by American 
officifls of public buildings, to which you have called attention, is 
simply an illustration of the abuses that arise out of that situation, is it 
not 4 The very act appropriating these public lands and buildings pro¬ 
vides that they shall be entirety for the use and benefit of the people of 
Porto Rico; but, on the contrary, they have been employed for the use 
or benefit—in part, at least—of these executive officers? 

Mr. Buso. Right at this point I will say that the trouble is not 
only that these buildings are used by the Americans, but because every 
year a certain amount of money is appropriated for water, lighting, 
and repairing these buildings. Even were these buildings used for 
the Porto Ricans, this expenditure would be wrong. The people 
should not be compelled to pa} 7 for water, lighting, and repairing of 
houses which are used for private residences. 

Mr. Hubbard. Your objection would be equally as strong were the 
buildings occupied in the same way by Porto Rican officials? The 
whole objection is that under color of office the American officials have 
taken possession of public property and appropriated it to their pri¬ 
vate use. 

Mr. Buso. Yes, sir; we have found out, and I myself must confess 
that there is a certain difference between the action of the civil officials 
and that-of the military officers. When I was appointed mayor of 
Humacao the troops were using as barracks a public building there. 
The officers were trying to occupy that building as property of the 
Government and as not belonging to the municipality. I called on 
the commander in chief of the forces at Humacao and asked him to 
give me back the building or to pay rent for it. He told me to ask 
General Davis. I addressed a letter to the general, and three or four 
days later I received a reply from him, and the rent was paid. So, as 
you see, there was no opposition on the part of the military officers to 
recognize the right of the city of Humacao to that building. There is 
trouble now in San Juan between the municipal officials and the civil 
officials about this point. 

Mr. Smith. Do any of the Porto Rican members of the executive 
council occupy public buildings for residential purposes free of rent? 

Mr. Buso. They have never occupied any public building. 

Mr. Smith. I was asking for information, merely. The public 
buildings are occupied by American officials only? 

Mr. Buso. J do not mean to say that all of the American officials 
occupy public buildings, but just some of them. I know that Auditor 
Hynes always lived in a boarding house, and that the present attorney- 
general, who has no family with him, but is by himself, is living in a 
private house. So I can not say that all the American officials are 
using public buildings, but some of them are. The “Pink Palace” 
was fitted up for the secretary. It was well known around the island, 
because he gave some fine receptions. Every man in Porto Rico knew 
that the “Pink Palace” was used by the secretary of Porto Rico. 

The Chairman. Do you know anything about' the native members 
of the executive council being excluded from or not being invited to 
attend the meetings of the so-called “ cabinet? ” 

Mr. Buso. Yes, sir; I know that this cabinet is composed of only 
the six American heads of departments. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 108 

The Chairman. All Americans? 

Mr. Buso. Yes, sir. In the First Annual Report of the Governor 
of Porto Rico can be found a fine picture of every American member 
of the executive council sitting with the governor, as chairman. 
Under this picture are the words u Governor and heads of depart¬ 
ments.” Ihis 44 cabinet” is shown in the first report of Governor 
Allen. That cabinet is going on always in the same. way. 

Mr. Crumpacker. The cabinet, as you call it, is composed of the 
executive officers of the island—six of them, I believe? 

Mr. Buso. Yes, sir. 

Mr. Crumpacker. And that cabinet, together with the other five 
members of the executive council, constitutes the upper branch of 
the legislature. 

Mr. Buso. Yes, sir. 

Mr. Crumpacker. These five appointees, who are native Porto 
Ricans, have nothing to do with the cabinet or the executive council, 
except to sit with them for legislative purposes. Is that true? 

Mr. Buso. Yes, sir. 

Mr. Crumpacker. They have nothing whatever to do with the exe¬ 
cution of the laws, and the administration of the affairs of the island. 
Those functions, belong exclusively to what you term the 44 cabinet,” 
and these cabinet meetings presumably are in relation to the execution 
of the laws. 

Mr. Buso. That is what we thought—that this cabinet was for 
merely executive purposes. But it has been known that there has 
been a meeting to prepare every bill and every resolution, and that 
they have then gone to the executive council to enforce what had 
already been agreed upon. 

The Chairman. The}^ .passed by a majority of one vote whatever 
they had agreed upon in the cabinet meeting? 

Mr. Buso. Yes, sir. There was an instance that made this quite 
clear. A bill was being discussed in the executive council and the 
commissioner of education w r as on the side of the Porto Ricans, and 
against the opinion of the Americans. He was just going to work 
with the Porto Ricans against the Americans. 1 he president asked 
to postpone the vote on the bill and to send it back to committee. 

The Chairman. Who do you mean by the 44 president? ” 

Mr. Buso. The secretary of Porto Rico was acting as president of 
the executive council. The cabinet of the governor held a meeting, 
and then the vote of the American members was unanimous. It was 
clearly shown that he changed his mind in the cabinet meeting; he did 
not do it in the council. 

Mr. Crumpacker. We have that here sometimes, they say. 

Mr. Gilbert. That system has been adopted dowrn there to put the 
masses of the people in touch with this new arrangement. Have the 
masses of the people been informed as to this organic act of Congress 
and the subsequent legislation there? What is the method of dissemi¬ 
nating that information among the people? 

Mr. Buso. By public meetings and newspapers. 

Mr. Gilbert. Have those laws been copied into the papers published 
in Spanish and circulated among the people? 

Mr. Buso. Yes, sir. They have been commented upon by the people 
in meetings. 

Mr. Gilbert. Are the people generally informed as to new legislation ? 


104 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Buso. They are always informed as to what is going on. When 
they can not read or write they get somebody to read for them. 

Mr. Gilbert. Don’t you think that when the people become more 
familiar with the method of doing things they will become better sat¬ 
isfied with it? Is it not something of prejudice against the inaugura¬ 
tion of the new system? 

Mr. Buso. The people like to have a hearing, and to express their 
own ideas, and to try to have their own way. 

Mr. Gilbert. Do the people seem to understand that we are trying 
to do the best we can for them? There is no impression among the 
people generally that there is any disposition on the part of the Amer¬ 
icans to oppress them in any wav, is there? 

Mr. Buso. Oh, not at all. The people of Porto Rico really trust 
the Americans, and that is why we were sent here. We have always 
said that the facts were not known here, and that if we had a chance 
to let the real American gentlemen—the American Congress—know 
how things were going on down in Porto Rico, conditions would change 
and improve. We believe that we will be granted justice. 

The Chairman. I think that is all, Mr. Mayor. Mayor Todd will 
you resume the stand until the noon hour? Mr. Mayor, you said 
there were some things which you wished to say concerning the pend¬ 
ing bill. 

Mr. Todd. If the committee will allow me to do so, I think that I 
will go over the bill and show what I think the people of Porto Rico 
would accept. I will take up the bill by sections. Here is section 1, 
which is an amendment of section 7 of our organic act, so as to pro¬ 
vide American citizenship for the people of Porto Rico. This is a 
very important measure, and I want to say right here that there is 
not a single Porto Rican who would not appreciate the high honor 
which Congress would confer upon them by such action. In his last 
message to the Congress the President of the United States said that he 
did not see any reason why this granting of citizenship should be with¬ 
held. He does not see any reason why we should not have American 
citizenship. 

Immediately upon reading that part of the President’s message the 
people of Porto Rico saw that things were changing up here—that the 
opinion of the people of the United States was changing for the better 
toward the Porto Ricans. And of course the people remembered that 
between the years 1898 and 1905 many messages from the President 
had been sent to Congress, and yet this one was the first that contained 
such a recommendation in regard to the Porto Ricans. They of course 
thought that the President had been advised by his natural advisers in 
Porto Rico, who were the American members of the executive council, 
that the people of Porto Rico had shown to possess those qualifications 
which are regarded as necessary for the conferring upon them of 
American citizenship, and that it would not take long for Congress to 
say that a people who could be made citizens ought to be made self- 
governing, because we think that one thing goes with the other. You 
can not say that a man is entitled to become an American citizen, which, 
in our opinion, is the highest honor that can be paid a man, and then 
deny him the privilege of self-government. 

Section 2 of the bill provides for the appointment by the governor 
of those officials who are to-dav appointed by the President, with the 
advice and consent of the elective senate; and for the, electing of the 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 105 

upper house of the legislative assembly in Porto Rico, which will be 
called the u senate,” instead of the <fc executive council.” I think that 
we have gone over that part of the bill, and I will not tire the com¬ 
mittee with any further discussion of it. 

Section 3 is simply to amendvthe section in the Forakei Act describ¬ 
ing the duties of the secretary of Porto Rico, so as to make them 
conform to the new order of things if the senate is elected. 

Section 4 repeals section 26 of the act of Congress of April 12, 1900. 

Section 5 amends section 27 of our organic act so as to make the 
elections in Porto Rico take place every four years. This is in line 
with the recommendation made by the President of the United States 
in his message to Congress.. The President says that he thinks it would 
be more advisable to have the elections every four years in Porto Rico 
instead of every two years. That would tend to give the people an 
opportunity to attend to their business and not mix in politics so often. 
This recommendation of the President has been received by all parties 
with approbation. They would like to have this change made. They 
think that they could do more with elections every four years than 
they can when the}'' are every two years b} T doing away with the 
natural excitement that always occurs in a country at election time. 
This would also lead us to change our local elections, placing them on 
a basis of four years instead of two. 

Section 6 amends section 28 of the Foraker Act. I do not think that 
I will speak again about this section, having brought the matter up in 
one of my previous hearings. 

Section 7 amends section 29 of the act. 

The Chairman. It goes into detail as regards the organization of the 
house of delegates. 

Mr. Todd. Yes, sir. It goes into detail as to the organization of 
the house of delegates, and so on. 

Section 8 amends the proviso at the end of section 32 of our organic 
act, relating to the granting of franchises. To-day these franchises, 
rights, privileges, etc., are granted by the executive council. Of course, 
if we are going to do away with the executive council and elect in its 
stead a senate, it would be a hardship for the people at large who 
would like to have franchises granted to have to wait until the legis¬ 
lative assembly met. 

The Chairman. What do you think of the proposition to enact a 
law which will prescribe definitely the terms under which franchises 
mav be granted, as we have in the United States, and then make a 
person or a corporation applying for a franchise comply strictly with 
the provision of the statutes in all particulars? Would that not be 
much better than to leave it all to the discretion of a committee? 

Mr. Todd. Yes, sir; I think so. In framing this bill, Mr. Larrinaga 
had to deal with the granting of franchises, and he thought he would 
put it in the hands of a committee, supposing that there would be sev¬ 
eral members of the senate living at San Juan. 

The Chairman. There is always favoritism when such a thing is 
placed in the hands of a committee. 

Mr. Todd. Yes, I admit that we are human. 

The Chairman. In Wisconsin the law prescribes definite conditions 
which must be strictly complied with before an applicant can receive 
a franchise. All applicants are put on an equality. 


106 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Todd. I will say right here that I think that the people of the 
different municipalities should be heard when franchises are granted 
affecting them. . . 

The Chairman. What do you think about putting in a proposition 
that no municipal public-service franchise shall be granted until after 
it shall have been approved by the municipality? 

Mr. Todd. That would be all right. In asking these changes, we 
are willing to accept any restrictions put upon us by Congress. We 
want to have a larger measure of self-government, but we are willing 
to have any restrictions that it might be well to impose. I think that 
suggestion would be very well received. 

The Chairman. Some of our cities are now demanding that no 
council shall have the right to grant street-car, gas, electric-light, or 
any other municipal franchise which is in itself essentially monopolistic, 
without first having the franchise submitted to the voters and accepted 
by them. 

"Mr. Todd. The trouble is that in Porto Rico we have no voice 
whatever in the towns. These franchises are granted by the execu¬ 
tive council without conferring with the people of the municipalities 
to see what they have to say concerning them. It is true that we 
receive a part of the taxes which are levied on these franchises, but 
we think that we ought to have a voice in the granting of them. 

The Chairman. Do you say that the executive council has shown 
a disposition, in actual practice, to refuse or to neglect to hear the 
people of a municipality when the council is about to grant a franchise? 

Mr. Todd. I do not say that they have refused to do this, but they 
sa}^ that the municipalities have no right to meddle in franchise mat¬ 
ters. The city of San Juan has a trolley line using its streets, and 
whenever the company wants to make a change or a siding or anything 
of that kind, instead of applying to the city council of San Juan, they 
apply to the executive council, and the city council is not allowed to 
decide whether that change can be made. 

Mr. Hubbard. Where does the executive council get that authority, 
in the organic act? 

The Chairman. Yes, in the organic act. It invests them with that 
right. Some of us did not like that at all, and we did the best we 
could to stop it. 

Mr. Crumpacker. I suppose that the same thing is true in relation 
to the other municipalities of the island? 

Mr. Todd. Yes, sir; I just mentioned San Juan as an illustration. 
There is another case in Ponce. A franchise was granted to another 
trolley company, and I know for certain that the city council of Ponce 
objected to some concessions for crossing certain streets, but it was to 
no avail—to no avail whatever. 

Mr. Gilbert. Have they exercised that same authority as to other 
franchises—telephone lines, for instance? 

Mr. Todd. Telephone lines; yes, sir. 

Mr. Gilbert. Do they interfere with the management of your 
municipal affairs except in the granting of franchises? For instance, 
if they wanted to locate a slaughterhouse in San J uan, would they apply 
to the municipal authorities? 

Mr. Todd. To the municipal authorities, of course, as that would 
not be a franchise. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 107 


The Chairman. For the benefit of the new members of the commit¬ 
tee, I will read from section 32 of the Porto Rican organic act: 

Sec. 32. That the legislative authority herein provided shall extend to all matters 
of a legislative character not locally inapplicable, including power to create, consoli¬ 
date and reorganize the municipalities, so far as may be necessary, and to provide 
and repeal laws and ordinances therefor; and also the power to alter, amend, modify, 
and repeal any and all laws and ordinances of every character now in force in Porto 
Rico, or any municipality or district thereof, not inconsistent with the provisions 
hereof: Provided , however, That all grants of franchises, rights, and privileges or con¬ 
cessions of a public or quasi-public nature shall be made by the executive council, 
with the approval of the governor, and all franchises granted in Porto Rico shall be 
reported to Congress, which hereby reserves the power to annul or modify the same. 

Mr. Hubbard. Would you construe that, Mr. Chairman, as applying 
to franchises for municipalities? 

The Chairman. Yes, sir. 

Mr. Hubbard. It seems a very broad construction. 

The Chairman. This section of the Porto Rican act leaving the 
entire control of the granting of franchises in the hands of the execu¬ 
tive council is not modified. The council has the control which has 
been exercised in the manner described by Mayor Todd. Please pro¬ 
ceed, Mr. Mayor. 

Mr. Todd. Section 9 of the bill under consideration amends section 
36 of the organic act. It goes into the details of the matter of the 
payment of salaries, etc. 

Mr. Gilbert. Is there not a little discrepancy there, in the bill as 
drawn? It says, “The annual salaries of the officials appointed b}^ the 
governor, and so to be paid, shall be as follows,” and then it goes 
through the whole list of departmental officials, not onty those appointed 
by the governor, but those appointed by the President. 

Mr. Todd. I think there is a mistake in the bill, and the Commis¬ 
sioner intends to have it corrected. Of course there is no objection 
here. The new section includes only the same salaries as those in the 
original act. 

Section 10 amends section 39 of the act in regard to the election of 
our Commissioner, making him a Delegate the same as any Delegate 
from a Territory of the United States. This is a matter in which the 
people of Porto Rico are very much interested. The people of Porto 
Rico to-day feel that they are not really represented as they should 
be. Our Commissioner would be obliged to attend to the business of 
Porto Rico in a very unprecedented way if it had not been for the 
courtesy of the Houseof Representatives in givinghim the privilege of 
the floor. We think that nothing would be more just than to put him 
on a par with the Delegates from the Territories, and give him the 
same rights and privileges. We know that the House of Representa¬ 
tives has the best intention in regard to that, as was demonstrated by 
passing a bill at the last session to provide for a Delegate from Porto 
Rico. 

The Chairman. You think that he ought to have the same right by 
law to speak on the floor of the House of Representatives that* is now 
given to the Delegates from New Mexico, Arizona, or Hawaii. 

Mr. Todd. Yes, sir. Section 11 repeals section 40 of the organic 
act and substitutes another section for it, providing that the senate 
and house shall meet once every year. This is just as it is to-day. It is 
not in accord with the recommendations of the President as embodied 
in his last message to Congress. It is not only a matter of making the 
budget, which was referred to by Mayor Buso, but we also think that 


108 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

a country like Porto Rico—a young country under the American flag— 
is not yet entirely settled as to its laws. We think that our laws are 
still under probation. We have changed our Spanish laws so as to 
conform with American ideas, and these laws have been changed gradu¬ 
ally every year, and many of them are merely on probation. 

Therefore, until we have established our laws on a permanent foot¬ 
ing, we think that we ought to meet every year in legislative assembly 
so as to repeal and amend present laws, and bring in new laws, con¬ 
forming them, of course, with those of our new mother country, which 
is the United States of America. That is the only objection which we 
have to the recommendations of the President of the United States, 
namely, the meeting every two years of our legislative assembly. 

This is all that I think I have to say regarding the bill. 

The Chairman. Now, 1 would like to ask Mr. Larrinaga one or two 
questions. Mr. Larrinaga, will you please point out on the top map 
[indicating map on wall] the small islands about which you spoke the 
other day ? 

Mr. Larrinaga. Here is the Island of Mona [indicating on the 
map], which, as you see, is about a one-hundredth part the size of Porto 
Rico. 

The Chairman. Is that inhabited ? 

Mr. Larrinaga. Yes, sir; at times there have been colonies there. 
For a long time it was deserted, but now, I believe they are working 
the mines again. 

The Chairman. What kind of mines? 

Mr. Larrinaga. Fertilizer. The latest news says, I think, that 
another company is going to work the mines. In old times, about 
eight or ten years ago, they were largely worked by German compa¬ 
nies. Ships came there, and the first shipload was taken to Germany. 

One of our best light-houses is situated there. In some way I hap¬ 
pened to go with a committee to choose a location for the light-house, 
because the old location was not supposed to be good. The central 
government brought the steel tower there and built the foundation, 
but when the Americans came there it was not yet finished. It was 
completed by the Americans. This is what is called Mona Passage. 
You will find it on all English charts. And this is a sort of a thorough¬ 
fare [indicating on map] for all traffic that will come from the north 
part of the United States and Canada. This will take place when the 
Panama Canal is completed. All traffic from as far north as the State 
of Virginia will not go in between Cuba and Florida, or between Cuba 
and Santo Domingo, but will always make for the Mona Passage, as 
it is called on the charts, so that Mayaguez is bound to be a very 
important town. 

The Chairman. How wide is that passage? 

. Mr. Larrinaga. I should take it to be about 30 miles wide. On a 
clear day one can see Mona Island, and from Mona Island on a very 
clear day you can just see the mountains of Santo Domingo on the 
west. 

These yellow spots all around the island of Porto Rico [indicating 
on map] are light-houses. 

The Chairman. What are those three small islands off to the east of 
Porto Rico? 

Mr. Larrinaga. Right here [indicating on map] to the south of the 
island is what is called “Dead Man’s Chest,” which is used only for a 
light-house. Right here are Culebro and Culebrita, which mean 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 109 

u snake” and “small snake.” This island is Vieques (you will find 
that in the old English charts), it is called Crabb Island [indicating on 
map]; and these four islands [indicating on map]—Vieques, Culebra, 
Culebrita, and Mona—are the “adjacent islands” of which the Treaty 
of Paris speaks. 

The Chairman. About how far is the island of Vieques from the 
east coast of Porto Rico ? 

Mr. Larrinaga. It is only three or four hours’ sailing by schooner. 
I should judge that it is about 15 miles. 

The Chairman. Are those islands fertile? 

Mr. Larrinaga. Some of them are. Mona Is barren. It is formed 
of lime rock. It is not ver} 7 large. When I once went there, I saw 
some fields of tobacco on the western side, but, as a rule, it is unculti¬ 
vated. Its formation is a soft carbonate of lime. There are some 
peculiar points about the island. There are some wild cattle and 
goats there. The wild goats are rather like the chamois. There is 
not a stream of water in the whole island, and the animals drink from 
the dew and when it rains. In Vieques there are to be found several 
sugar plantations, which are in a very prosperous condition. It has 
but one rather large cit}^. Isabel II is the capital, and is a very pretty 
city, with a harbor. It has a few other smaller harbors, like Puerto 
Ferro. Culebra is a deserted island, with the exception of a little 
colony around on the coast. Culebra is quite fertile. For some time 
there has been a Porto Rican colony there. 

In old times it was covered very thickly with forests of hard wood, 
and all the Windward Islands peoples, who are very poor—most of 
them are colored people—came there to make lumber. 

The Chairman. Those are the English islands east of Culebra, are 
they not ? 

Mr. Larrinaga. Yes, sir; and also southeast. They are the Virgin 
Islands, British and Danish, and then here St. Thomas, Santa Cruz, 
Dominique, and Martinique, which is French. Most of the wharves 
in these English islands have been built of wood from Culebra. The 
forests of Culebra are gradually being thinned out. 

Mr. Gilbert. Are there any coral reefs around the island? 

Mr. Larrinaga. Yes, sir; but as a rule the Porto Rican coast is 
very clear of reefs; and, as I told you the other day, navigation is 
very safe on account of the chain of light-houses around the island. 

The Chairman. Do you think of anj^thing else that you would like 
to say to the committee? 

Mr. Larrinaga. I do not want to take the time of the committee, 
but I would like to know whether or' not there is to be another hearing 
on this Porto Rican matter, as I have a short statement that I would like 
to make to the committee in order that there might be no misunder¬ 
standing as to our views. I want to tell the committee right here 
that I am a member of the commission sent here by the Municipal 
League, having been appointed a member at their convention. 

The Chairman. You mean the convention of municipalities? 

Mr. Larrinaga. Yes, sir. The convention appointed the Resident 
Commissioner a member of the commission. 

The Chairman. To-morrow morning Commissioner Forbes of the 
Philippine Commission would like to be heard for a short time. He 
has some matters of importance to present to the committee. I am 
anxious to close these hearings, so that we may get to work on these 
bills as soon as possible. 


Committee on Insular Affairs, 

January 26, 1906 . 

STATEMENT OF HON. TULIO LARRINAGA—Continued. 

Mr. Larrinaga. My statement is in connection with some of the 
facts that have been brought to the attention of the committee, in 
which some personalities were involved. Some of' these facts were 
drawn from us by the questions of different members of the com¬ 
mittee and some were presented by other members of the municipal 
commission and myself in reference to the attorney-general, and all 
calculated to give some idea of how the executive council has been a 
failure. 

Take, for instance, the case that was last referred to by Mayor 
Buso, where $11,500 were taken from the Porto Rican treasury to give 
a case to a lawyer as fees for taking a single case before the supreme 
court. There was a pretext to reduce it to $11,500, but there was no 
necessity whatever for the expenditure of that money, as the attorney- 
general of Porto Rico, who was supposed to attend to such cases for 
Porto Rico as this one, was a very able lawj^er—one of our most bril¬ 
liant lawyers of Porto Rico. 

He is very familiar with the old laws of the church and our present 
laws, and he could have taken care of the interests of the people of 
Porto Rico very well. Somebody saw fit to give up his office of 
$4,000 to get this fee of $11,500. 

The Chairman. Do you mean that a member of the executive coun¬ 
cil resigned his position to take that case? 

Mr. Larrinaga. That is a fact; yes, sir. I did not mean to state 
it so close. 

The Chairman. What member of the executive council so resigned? 

Mr. Larrinaga. The secretary. 

The Chairman. The secretary of Porto Rico ? 

Mr. Larrinaga. Yes, sir. 

The Chairman. What was his name ? 

Mr. Larrinaga. Charles H. Hartzell. It may have been that it 
was thought that he was better able to take care of the interests of 
the people. There was another American lawyer, who knows the 
Spanish language very well and who has studied Spanish laws, who 
was an applicant, but he was turned down, and it was given to a gen¬ 
tleman who was not so well qualified to attend to it. That shows you 
that even a good American does not have any show with the executive 
council, and that has been the case every time. 

1 could cite many instances where good Americans and independent 
men have been turned down for gentlemen in high positions. What 
I want to do in connection with these very disagreeable facts which 
we have had to bring before the committee is this: I wish to state 
right here, in order that I may be clearly understood by the members 
of the committee, and that there shall be no misunderstanding what¬ 
ever on this point, that the facts which have been brought to your 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. Ill 

attention by the members of the Commission, whether relating to bur 
local government in general or to individual members of that govern¬ 
ment, in order to prove the failure of the executive council, are in no 
manner to be understood as expressing any personal ill-feeling against 
anybody, and much less against the American people, for whom our 
admiration and reverence has not in the least diminished. I will also 
say that our faith in the American people and their sense of justice 
and right is not shaken in the least. That is all. 

The Chairman. That concludes your statement, does it? 

Mr. Larrinaga. Yes, sir. 

The Chairman. Mayor Buso, 1 want to ask you one question. You 
said yesterday that you came from Spain in the year 1883 and have 
since resided in Porto Rico. Do you wish to make any additional 
statement about that? 

Mr. Buco. Yes, sir. I was born in Porto Rico and went to Spain 
in 1872 to attend college. In 1883 I returned to Porto Rico, and have 
since always lived there. 

The Chairman. You may put that in your statement of yesterday 
in order that it may be consecutive. 


AMENDMENT OF PORTO RICAN CIVIL GOVERNMENT 

ACT. 


Committee on Insular Affairs, 

House of Representatives, 

Friday, April 6 , 1906. 

The Committee on Insular Affairs met at 11 ^o’clock a. m., Hon. 
Henry Allen Cooper in the chair. 

STATEMENT OF HON. BEEKMAN WINTHROP, GOVERNOR OF 
PORTO RICO. 

The Chairman. Gentlemen, we will hear Governor Winthrop this 
morning concerning some of the subjects testified about by Mayor 
Todd, of San Juan, and Mayor Buso, of Humacao, who were recently 
before the committee. 

[To the governor.] Those witnesses had something to say by way 
of criticism, possibly, of the administration of the island. For ex¬ 
ample, the occupation of certain public buildings there by members 
of the executive council as residences, etc. You have read the tes¬ 
timony, have you not? 

Governor Winthrop. I have read the testimony; yes, sir. 

The Chairman. And you are familiar with the comments of the 
witnesses ? 

Governor Winthrop. Yes. 

The Chairman. The committee will be glad to hear anything that 
you may desire to say in reply. 

Governor Winthrop. I think, if you will allow me, that it would 
be well for me to start back and give a history of those houses, and 
then come up to the present' time. The houses in Spanish times— 
and I should like Mr. Larrinaga to interrupt me, if he will, should 
I say anything with which he does not agree—were occupied by the 
governor and his general staff. 

Mr. Gilbert. Of what houses are you speaking? 

Governor Winthrop. I am speaking of certain houses occupied by 
some members of the administration. They were occupied in Span¬ 
ish times by members of the governor’s staff. The house now occu¬ 
pied by the secretary of Porto Rico, Mr. Post, was formerly occu¬ 
pied by the “ segundo cabo,” or the second in command, and is oppo¬ 
site the governor’s house. The smaller houses there were occupied 
by the governor’s staff, and one house on the governor’s grounds was 
used as a guardhouse for the San Juan gate. In military times the 
houses continued to be occupied as residences by officers of the Army. 
After Governor Allen was inaugurated, General Davis, who was m 
command of the army, took possession of the so-called “ Pink Pal¬ 
ace,” and lived in it. 

The Chairman. The “ Pink Palace ” is the building now occupied 
by Secretary Post? 

112 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 113 

Governor Winthrop. The one now occupied by Secretary Post. 
Then, when Mr. Hartzell went down as secretary, he tells me that 
when President McKinley offered Mr. Hartzell the position through 
his father, he told Mr. Hartzell that his son would have as his resi¬ 
dence this building known as the “ Pink Palace,” with water and 
light free, and Mr. Hartzell took the position with that understand¬ 
ing. In 1903, President Roosevelt, acting uder authority granted 
to him by the act of July 1,1902, set aside a part of this building for 
use as a Federal court. There was some question at the time as to 
whether or not he was to set aside all of the building for Federal pur¬ 
poses. But, finally, upon recommendations being made to him by 
members of the administration at that time, he set aside five-eighths 
of it, leaving three-eighths of the house for the use of the insular gov¬ 
ernment. This matter, as Mr. Todd says in his testimony, was never 
formally complained of, namely, the occupancy of these residences 
by the members of the American administration. 

As soon as this testimony of Mayor Todd’s came out I called to my 
office several members of the lower house of the legislature, or the 
house of delegates, which was then in session. I told them that no 
complaint had ever been formally made of this matter, but that I felt 
that it was now time that some action should be taken, insomuch as 
the matter had been brought up in the form of a formal complaint 
before the Committee on Insular Affairs in Congress; and that 
should no action be taken on the matter by the house of delegates 
during that session I was certain that all of the members of the admin¬ 
istration occupying the houses in question would immediately vacate 
them, as they would then understand that such was the desire of 
the insular legislature. 

The appropriation act was made up, as is customary, in the upper 
house, or executive council. It was sent to the lower house, and 
members of that body voluntarily inserted a provision authorizing 
the governor to assign those houses to certain members of the insu¬ 
lar government, and the appropriation act was passed with that por- 
vision in it. 

Mr. Gilbert. The appropriation act originated in the upper house? 

Governor Winthrop. In the upper house, but this amendment was 
inserted in the lower house, or the house of delegates. If you would 
like me to read the amendment, I will be glad to do so ? 

The Chairman. Yes; read it please. 

Governor Winthrop (reading from bill): 

Sec. 7. Until otherwise determined by the legislative assembly, the governor 
of Porto Rico is authorized to assign as official residence, to the speaker of the 
house of delegates, the justices of the supreme court, and the heads of the 
administrative departments, such buildings belonging to the government as 
may not be needed for public purposes. 

The Chairman. What was the vote on that in the lower house; do 
you recall? 

Governor Winthrop. No; I do not recall the exact vote, but I 
asked them afterwards if there was any opposition, and they said 
that there was none to speak of. 

Mr. Gilbert. The officials were already in possession of the houses 
at the time of the passage of that amendment, were they not ? 

Governor Winthrop. Certain members' were. There were some 
houses vacant. 


35815—08-8 


114 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Rucker. I have heard it intimated in some form that these 
buildings, as a matter of fact, were needed for governmental pur¬ 
poses. How about that ? The provision that you have just read says 
that such buildings as were not needed for governmental purposes. 

Governor Winthrop. At the present time the insular government 
is receiving rent for the lower storjr, or part of the lower story of 
the deputacion building, from the Post-Office Department. There 
are being rented by the insular government at this time the municipal 
court building and the registrar’s office. Those are the only two 
offices being rented at the present time by the insular government in 
the city of San Juan. The buildings, with the exception of one, 
would not be suitable for office purposes. One of the buildings 
would probably be suitable for that purpose. This act to which I 
have referred was passed in March last, and I left Porto Rico very 
soon afterwards, so that as yet I have not had time to act upon the 
authority given me by it, and have not assigned the buildings. 

Mr. Rucker. They are occupied, however, as they have been ? 

Governor Winthrop. They are now occupied as they have been, 
except that the occupants pay for their light arid water. 

Mr. Rucker. You say that they do pay for light and water? 

Governor Winthrop. Yes, sir. 

Mr. Gilbert. Is there any controversy, officially or otherwise, be¬ 
tween the insular government and the municipal government as to 
the ownership of these buildings? 

Governor Winthrop. None whatever. 

The Chairman. I think that it was testified to by one of the may¬ 
ors, and, possibly, by both of them, that the occupants of those build¬ 
ings did not pay anything for water and light. 

Governor Winthrop. No; they did not. But when this matter 
came up, and the provision simply authorized the assignment of the 
buildings for occupancy, I told them that I regarded that as super¬ 
seding any authority they formerly had from the President of the 
United States, and that the light and water should be paid for by the 
occupants of the buildings, and they all agreed to that. 

Mr. Page. By whom is the light and water furnished ? 

Governor Winthrop. The water is furnished by the city of San 
Juan, and the light by an electric-light company there. 

Mr. Rucker. Do you mean at the expense of the city? 

Governor Winthrop. No; at the expense of the insular govern¬ 
ment, from the water plant owned by the city. 

Mr. Rucker. But the expense for the lighting comes from the 
government ? 

Governor Winthrop. It did until this provision was inserted in 
the appropriation bill. I have a picture of the houses here, if the 
committee would like to see them. 

The Chairman. I think that we will take up another topic before 
we stop to look at the pictures. 

Mr. Rucker. Is it your impression that it is satisfactory to the 
people there, and, therefore, that the government officials in the 
island should occupy those buildings free of cost ? 

Governor Winthrop. They feel down there, as Mayor Todd has 
testified, that the salary of $4,000 is rather a small one to attract 
the best class of men, arid that this additional privilege is more 
likely to induce good men to come. 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 115 

Mr. Rucker (laughing). Do I understand you to say that the 
executive council shares in the belief that the salary does not attract 
the very best citizens ? 

Governor Winthrop (laughing). I think that the members of the 
executive council ought to be allowed to speak for themselves as to 
that. 

The Chairman. Something was said, about the “cabinet” of the 
governor, and that the individual members of the executive council 
were not only treated as mere figureheads, but had been expressly 
denominated as “figureheads” by some of the men sent from the 
United States as members of the executive council. Will you please 
tell the committee what you know as to that? 

Governor Winthrop. I answered that, I think, in my letter to you 
rather fully, Mr. Chairman. 

The Chairman. Yes. 

Governor Winthrop. I believe that Doctor Hollander, who is 
charged with having stated that Mr. Rosendo Matienzo Cintron was 
merely a figurehead, denies that statement, although I have not had 
an opportunity of communicating with him. 

The Chairman. I have received a letter from Doctor Hollander, 
in which he expressly denies that. 

Governor Winthrop. As to the so-called “ cabinet meetings,” they 
are not held regularly. They were held regularly once a week for a 
period of a month and a half, or six weeks. They are simply meet¬ 
ings of the governor with the heads of the administrative departments 
to discuss administrative matters. Two years ago the legislative 
assembly of Porto Rico created a new department, taking certain 
powers away from other departments, and organized a new depart¬ 
ment of health, charities, and corrections, requiring that the governor 
should appoint a member of the executive council as the head of the 
new department. 

In January, a year ago, I appointed Mr. Andreas Crosas, who was 
born in Porto Rico and has lived there all his life with the exception 
of the time he was in the United States attending school, head of 
this department. Since I appointed him he has, naturally, always 
attended those meetings, as he is the head of an administrative de¬ 
partment, and he has entered into the discussions of the administra¬ 
tive affairs of the government. I have never invited the four other 
members of the executive council to attend these meetings, as their 
duties are purely legislative, and because I did not think that they 
were especially concerned in administrative matters any more than 
anyone else who has purely legislative duties. However, when any¬ 
one has been present or has happened to come in the office at that 
time, I have always gladly had him in the room with us and asked 
him to come in and listen to our discussions. I have absolutely no 
objection to their coming in at any time, but, on the contrary, am 
very glad to have them. But we do not discuss legislative matters ; 
we discuss administrative matters. 

The Chairman. Does any member of the committee desire to ask 
any questions on this.point? 

Governor Winthrop. Air. Larri.naga states in his testimony that 
it is a pretty hard proposition to answer whether they would be re¬ 
ceived in the cabinet meetings if they desired to attend. Well, they 


116 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

have been received when they have come into my office, and they 
always would be received gladly if they ever wished to come in. 

The Chairman. The criticism was made that the money appro¬ 
priated by the legislative assembly of Porto Rico to help the coffee 
industry of the island was not properly expended—at least, that it 
was not expended to the best advantage, in that the man employed to 
come to New York and advertise the Porto Rican coffee and promote 
its introduction and consumption in the United States w T as a mere 
clerk without any special knowledge either of coffee growing or of 
coffee selling. 

Governor Winthrop. The man whom I appointed to that position, 
Mr. Scott Truxtun, came to the island in March, 1902. He was on 
the island some three years, and not one year, as Mr. Larrinaga states 
on page 22 of the printed testimony. 

The Chairman. Mr. Todd did most of the testifying upon that 
subject. 

Mr. Larrinaga. Did I say anything about that ? 

Governor Winthrop. Yes; in the middle,of page 22. Mr. Trux¬ 
tun was in the paymaster’s office of the department of the interior 
and also a field man of the same department. For a year before I 
appointed him he was a statistical clerk in the secretary’s office, gath¬ 
ering statistics in regard to the economic conditions and the re¬ 
sources of the island. The bill was prepared after talks with differ¬ 
ent gentlemen and was presented by five members of the lower house. 

The Chairman. Do you mean the bill selecting this man ? 

Governor Winthrop. No; the bill authorizing the position. 

The Chairman. It appropriated $12,500. 

Governor Winthrop. It appropriated $12,500, and was introduced 
by Messrs. Palmer, Medina, de Diego, Bernadini, and Yias Ochoteco. 
Two of these gentlemen, Messrs. Palmer and de Diego, wrote me 
letters strongly recommending Mr. Scott Truxtun for the appoint¬ 
ment. In addition, his application for appointment was indorsed by 
the five Porto Rican members of the executive council. No other 
recommendation for that position was ever made to me. 

The Chairman. Your idea was- 

Governor Winthrop. My idea was to have a Porto Rican appointed 
to that position. It was, however, very essential that the appointee 
should be a man who combined a knowledge of the resources of the 
country with a knowledge of the business methods of the United 
States. Now, it was difficult to get a man who combined these quali¬ 
fications who would be willing to accept the office at the salary of 
$2,500. 

Mr. Larrinaga. Did Mr. Todd in his statement say anything about 
the appointment ? 

Governor Winthrop. I think he criticises the appointment. 

The Chairman. He says: <c I do not think he knew anything about 
coffee.” 

Mr. Larrinaga. Because my statement was that it was limited to 
about one year. 

The Chairman. You made no criticism at all? 

Mr. Larrinaga. No ; none at all. I had no reason to make any. 

The Chairman. On the contrarv. Mr. Larrinaga has said that he 
did not like the criticisms; but Mayor Todd did not like this par¬ 
ticular appointment. 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 117 


Mr. Rucker. You say that the five Porto Rican members of the 
executive council recommended the appointment of this young man. 
How are those five members chosen ? 

Governor Winthrop. Those five members are chosen by the Presi¬ 
dent of the United States, and are confirmed by the Senate. 

Mr. Rucker. The same power that appoints the American mem¬ 
bers of the executive council. Is it youv impression, or have you 
any information, as .to whether these gentlemen were inspired by 
any influences to make this recommendation, or was it a free, volun¬ 
tary act on their part to make that recommendation for the appoint¬ 
ment of this young man ? 

Governor Winthrop. I do not know of any influences so brought 
to bear. 

Mr. Rucker. In other words, it seems to me as a practical propo¬ 
sition—I am merely asking for information—that those people inter¬ 
ested, as we assume they are, in the government and the people of 
the island, and knowing that coffee is the chief product of the island, 
would seek to get some man identified with the interests of the peo¬ 
ple there, and some man familiar with the coffee business, who could 
better serve his country in the introduction of the coffee of the island 
than could an American citizen who was seeking the place *as an 
appointment. 

Governor Winthrop. I can say that no pressure was brought to 
bear upon any of these gentlemen to sign this application. They 
are not men who would do things in that way. The Porto Rican 
members are very independent men. 

Mr. Rucker. I have seen two or three American citizens who have 
to do things in a certain way or not do anything at all. The question 
in my mind is whether there are any such influences there. I do not 
mean that these men were compelled by force, and I mean to say, 
distinctly, that there was no executive control at all. Have you any 
reason to suspect that they were induced to sign the recommendation ? 

Governor Winthrop. None whatever. 

Mr. Rucker. As the executive of that island, and knowing the in¬ 
terests of those people there as a whole and the value of that product, 
did it not occur to you that some Porto Rican would be better quali¬ 
fied to discharge that duty than would an American who had been 
there for only a year or two ? 

Governor Winthrop. I thought of that before making the appoint¬ 
ment. 

Mr. Rucker. Did it not occur to you as true ? 

Governor Winthrop. No; because I felt that it was essential that 
he should be a man who could speak the English language perfectly, 
and would be able to meet business men and understand the business 
methods of the United States. I felt that that was very essential. 

Mr. Rucker. Did you think that it was more essential to the 
Americans or to the Porto Ricans that he should be familiar with 
Americans and speak our language perfectly ? 

Governor Winthrop. To the Porto Ricans. The Porto Ricans are 
those in whom I am especially interested. 

Mr. Rucker. I know nothing about the Porto Rican people as a 
whole. I have had the opportunity of meeting only a few of them. 
But it does seem to me that, judging from those whom I have met, 


118 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

that plenty of Porto Ricans could be found who could sell coffee and 
know more about it than an American. 

The Chairman. In that connection, let me read a little from Mayor 
Todd’s testimony, given on page 22 of the printed report. [Reading 
from testimony:] 

Mr. Webber. It requires a man who has had experience in coffee raising—• 
an expert—you think? 

Mr. Todd. I do not think he is an expert. 

Referring, of course, to Mr. Truxtun. 

Mr. Webber. I say it requires that he should be such-a man? 

Mr. Todd. Yes, sir; and I claim that we have such men down there in Porto 
Rico, men who have been in business in New York, and have been in the coffee 
business, and know all about it. 

Governor Winthrop. I can only say, Mr. Chairman, that no other 
recommendations were made to me, although I discussed the matter 
fully several times with a number of Porto Ricans of ability before 
making the appointment. I believe that one of the Porto Ricans 
with whom I discussed the matter did approach a Porto Rican on the 
subject, but he refused to take the position at the salary provided 
for it.* 

Mr. Larrinaga. May I be allowed to say a word in this connection ? 

The Chairman. Certainly. 

Mr. Larrinaga. I know how it is in Porto Rico. I do not believe 
that this matter has much importance. The governor says—and I 
do not doubt his words—that he had the recommendation of several 
Porto Ricans. I believe the clue is this, that the Americans, like 
everybody else, go to their friends and get their support. You know 
how it is. Every time a man wants an office he goes to his friends 
for support. 

Mr. Rucker. I want to say that anything that is for the best inter¬ 
ests of that government, or appears to be, will meet with my hearty 
approval at all times. The criticisms that I am making, if they 
could be termed criticisms—and I believe that they are so considered 
by my friend here—but the apprehension I had is this, that the 
executive council is composed of six Americans appointed by the 
President and five Porto Ricans appointed by the President, so that 
the balance of power is always with us—with the Americans. The 
five Porto Ricans might stand as a compact body, and the six Ameri¬ 
cans would, of course, oppose them. 

Governor Winthrop. They never have done it as long as I have 
been governor of the island. 

Mr. Rucker. I am glad that the governor has interjected that re¬ 
mark. I want to know whether any demarkation line has declared 
itself. If not, of course I am satisfied. I want to say distinctlv that 
my inquiries are not intended in the nature of criticism, but I feel 
that I have a right to make the inquiries. 

Governor Winthrop. You were speaking of the two distinct bodies 
of the executive council. 

Mr. Rucker. Incidentally. Because I believe that the council is 
thus composed. 

Governor Winthrop. These recommendations came from the Porto 
Rican members, and, possibly, from a certain number of the Ameri¬ 
cans m the council. 





HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 119 


Mr. Rucker. Were they members of the council ? 

Governor Winthrop. Three American members of the executive 
council and the five native members: and then the other two mem¬ 
bers— 

Mr. Rucker. The only anxiety I have is this, that whether because 
of our relations there with those people, as great and absolute author¬ 
ity as it is, as practiced in the island, it has not been suggested, or 
has occurred to those Porto Ricans that it is best to “ stand in,” as 
it were, with the Americans, and let an American have that appoint¬ 
ment to the sacrifice of the needs of the island. 

Governor Winthrop. I am sure that that never entered the minds 
of those gentlemen. I did not understand you at first. I am sure 
that that was not done. 

The Chairman. Do you think that that agent has been rendering 
good service? 

Governor Winthrop. I think he has; it has been a difficult road to 
travel, but he has been doing well, I think. I have talked with a 
number of coffee growers, especially with those around, Yanco, who 
grow the best coffee in the island, and they seem very much pleased 
with the result of his work. 

Mr. Rucker. Is it your impression after having been there as long 
as you have—some years, I understand, and have become familiar 
with the people and their habits—that he is the best man that could 
have been obtained to fill the position? And if he is not the best 
man, is it not your impression that it is the duty of the Executive to 
get the best man ? 

Governor Winthrop. I think, on the whole, that he is the best man 
that could be obtained. That is my belief, because I tried very hard 
at that time to get a first-class man. 

Mr. Rucker. It would occur to me that a Porto Rican expert in 
coffee, and who had transacted business in New York City and lived 
here, would be a better man than an American who had not been down 
theae, and who had never seen coffee growing until he had gotten 
there. 

Governor Winthrop. I think that it is very difficult to find such a 


Mr. Rucker. I thought that possibly some of those Porto Ricans 
who have been in New York in business might find some young man 
in their own families for the position. I take it that Mr. Truxtun is 


a young man. 

Governor Winthrop. I think he is about 40 years old. 

The Chairman. It would seem to some of us that advantage might 
be taken of the letter which the President wrote, that Porto Rican 
coffee is what is used at the White House—that an adroit advertiser 
could make good use of it. There are some people who would give 
$500,000 for a letter of that kind. 

Governor Winthrop. Have you seen that letter? 

The Chairman. No; but I have heard about it. 

Governor Winthrop. I think that Mr. Truxtun would be glad to 

get that letter. , 

Mr. Larrinaga. The President wrote the letter, but it seems that 
he naturally feels that it should not be used specially for advertising 
purposes, and it is very difficult to get a copv. Last year I made up 
my mind to get a copy of that letter, and I did. I have a copy of it. 


120 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

The president of the St. Louis Porto Rican Exposition could not send 
it to me, but I found out through him that a New York paper had 
published it, and they sent it to me. I was going to send the letter to 
a man in California, who wanted it for advertising, but when I in¬ 
vestigated the matter I could not ascertain whether that gentleman 
was selling Porto Rican coffee or not. He had a building called the 
“Porto Rican Building” on his letter head, beautifully engraved. 
We hold that the Porto Rican coffee is the best in the world. I wrote 
the man and told him that if he would inform me which house, either 
on the Atlantic coast or the Pacific coast, he got his coffee from I 
would send him a copy of the letter with my indorsement on it that it 
was an authentic copy of the letter. I have never received an answer. 

The Chairman. Nevertheless, the letter is in existence. 

Mr. Larrinaga. I have got it there. 

Mr. Rucker. Some of your coffees bring the highest prices in 
Europe, do they not ? 

Mr. Larrinaga. Some of our coffees bring the highest prices in 
Europe. 

Mr. Page. Would not the proper man to use that letter be ftie agent 
in this country? 

The Chairman. That is what I am trying to bring out. If neces¬ 
sary, we could pass a United States statute imposing a penalty for 
anybody to sell other coffee under the name of Porto Rican coffee. 

Mr. Rucker. I take it that the governor of Porto Rico uses Porto 
Rican coffee. 

Governor Winthrop. Yes. 

Mr. Rucker. His testimony would go a long ways with me. 

Governor Winthrop. It is the best that I have ever tasted. 

Mr. Rucker. It is the best thing you have to drink down there. 

Governor Winthrop. I really think that it is the best coffee any¬ 
where. 

Mr. Larrinaga. When you go to Paris and ask for a cup of good 
after-dinner coffee, the probabilities are that they do not give you 
Mocha or Java, but Porto Rican coffee. 

The Chairman. There is no question but that there is an oppor¬ 
tunity there which, if improved, would, it seems to me, lead to the 
early rehabilitation of the Porto Rican coffee industry. 

Governor Winthrop. And secure for it a market. 

The Chairman. Certainly. It would not mean simply g6ing to 
New York and opening an office and talking about the merits of the 
coffee, but it must be managed by somebody who understands how 
to deal with competition and take advantage of legitimate advertising 
methods. 

Governor Winthrop. The agent is, of course, handicapped by the 
small amount of money appropriated for advertising purposes. 

The Chairman. Can you not make the coffee growers down there 
understand that there must be enough money appropriated for this 
purpose ? 

Governor Winthrop. We have such great need for the money that 
it is very difficult to get sufficient for this purpose. 

The Chairman. There is no need so pressing as the rehabilitation 
of the coffee industry. 

Governor Winthrop. I should be very glad to see a large amount 
of money appropriated for the advertising of our coffee. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 121 

The Chairman. Just as quickly as you restore that industry, you 
bring general prosperity to the inhabitants, and everything else that 
follow in prosperity’s train. The prosperity of the coffee industry 
is the first thing to accomplish, if possible. 

There is one other thing to which I wish to call your attention, that 
was brought out by Mayors Todd and Buso. It is that the opinions 
of the supreme court and appelate courts of the island have never 
been published, but that courts and the bar and the people have been 
obliged to depend upon carbon copies of the opinions. This, if true, 
is a, very extraordinary fapt. The regular publication of the court 
decisions in the Philippines has been one of the great steadying influ¬ 
ences in those islands. It is the first time they have ever had pub¬ 
lished reports there. Chief Justice Arellano told me, during a con¬ 
versation at Manila last summer, that one of the real substantial 
features of our legal procedure is that of relying upon precedent— 
the old English idea—that when once the courts have decided the 
law, the decision should be adhered to until after due consideration 
reversed. 

Governor Winthrop. That is unfortunately true. The supreme 
court decisions have not as yet been published in book form. 

The Chairman. Is there any appropriation for it? 

Governor Winthrop. There was an appropriation for it in 1902, 
I think. 

Mr. Larrinaga. I was a member of the house of delegates at that 
time. 

Governor Winthrop. Then it was in 1903. 

Mr. Larrinaga. I believe that there was something in the house on 
the subject in my time. 

Governor Winthrop. It was either in 1902 or 1903 that an appro¬ 
priation was passed putting it in the hands- 

The Chairman. That was before you went there ? 

Governor Winthrop. Yes, sir. The law directed the attorney-gen¬ 
eral to assign one of the judges of the supreme court as reporter, 
and one of the judges was so assigned, and he kept the record up 
until I came there, in 1904. He had prepared enough decisions to 
make one volume. Then the money practically gave out. This year 
an attempt was made to secure an appropriation for the purpose, but 
it was not forthcoming. 

The Chairman. Do you mean that they refused to appropriate for 
the publication of the supreme court records ? 

Governor Winthrop. I do not know who was responsible, but in 
the last night’s conference over the appropriation bill an attempt 
was made to insert an appropriation of $3,000 for that purpose. 

The Chairman. Who draws up the original appropriation bill ? 

Governor Winthrop. It is drawn up bv the treasurer. 

The Chairman. Was it not the treasurer who inserted that pro¬ 
vision? 

Governor Winthrop. It was not brought to his attention until 
after the bill had passed the executive council, and then passed the 
lower house in the amended form. But they have granted a sum 
for miscellaneous expenses, subject to the approval of the governor, 
and I have promised to assign a sufficient sum out of that fund to 
publish the'supreme court reports already in existence, and also to 
allot enough to carry on the work until the next legislative session. 


122 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. . 

I will then recommend in my message to the legislature that the posi¬ 
tion of reporter should be created for the supreme court. 

The Chairman. It would seem to be a matter of very great im¬ 
portance. 

Governor Winthrop. It is of very great importance. 

Mr. Rucker. Then I understand that the reports will soon be pub¬ 
lished out of the contingent fund in your hands? 

Governor Winthrop. Yes, sir. I believe that the secretary of the 
supreme court at the present time is publishing in small pamphlets 
in Spanish the decisions of the supreme court. . But, of course, that 
is not the proper form. It is convenient, but the reports should be in 
a regular volume. 

The Chairman. Will the reports be published in Spanish, with 
English translations? 

Governor Winthrop. In Spanish and English. 

The Chairman. In the same volume? 

Governor Winthrop. I think in separate volumes. This form is 
more convenient, and I do not really see the necessity of publishing 
them in the same volume. 

Mr. Rucker. I think that it would be more convenient to have them 
in separate volumes. I suppose that volume 1 in English and vol¬ 
ume 1 in Spanish would contain the same decisions. 

Governor Winthrop. Exactly the same decisions. One would be a 
duplicate of the other, except that one would be in English and the 
other in Spanish. 

The Chairman. There must be due precaution, however, to secure 
accurate translations. 

Governor Winthrop. That, of course, is very expensive, and we 
used up a great deal of the funds appropriated, but we have enough 
now for one volume. 

Mr. Rucker. Are the judges native Porto Ricans? 

Governor Winthrop. In the trial courts, or district courts, there 
are eight judges, seven of whom are Porto Ricans and one of whom 
is an American. There was a mistake in the testimony in which it 
was said that there are five; there are eight. In the supreme court 
there are five judges, three of whom are Porto Ricans and two of 
whom are Americans. The judiciary in Porto Rico is an excellent 
body of men. The supreme court has the respect and esteem of every¬ 
one throughout the island. The district courts are all composed of"a 
first-class body of men, both the judges and the district attorneys. 

The Chairman. Did you say that in the district courts seven out of 
eight were native Porto Ricans ? 

Governor Winthrop. Seven out of eight are native Porto Ricans 
and one is an American. Of the district attorneys attached to the 
courts there are six Porto Ricans and one American; so that out of the 
fifteen positions in the district courts, thirteen are filled by Porto 
Ricans and two by Americans. 

Mr. Rucker. Are those judges all elected by the people? 

Governor Winthrop. Those judges are appointed. The district 
judges are appointed by the governor, by and with the consent of the 
executive council. The supreme court judges are appointed by the 
President, by and with the consent of the Senate. The municipal 
judges are elected by the people, and the justices of the peace are 
appointed by the governor. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 123 

The Chairman. Will you please tell the committee what you think 
of the proposition of granting franchises to construct wharves there, 
or of the general proposition to give authority to the Secretary of 
War? 

Governor Winthrop. I think that it is very important that general 
authority should be granted to the Secretary of War. At the present 
time wharves can not be constructed in Porto Rico, and there is 
pressing need for wharves, especially in the three largest harbors of 
San Juan, Ponce, and Mayaguez. I believe that the Committee on 
Rivers and Harbors of the House of Representatives visited Porto 
Rico last spring, and, in their opinion, the needs of the commerce of 
Ponce and Mayaguez could be best met by building out wharves or 
piers. At the present time it is impossible to do this, and I think it is 
exceedingly essential that authority should be given the Secretary 
of War to grant licenses for the construction of piers and wharves 
over navigable waters in Porto Rico. It is very essential for the com¬ 
merce of the island. In San Juan we do not have enough piers, and 
in practically none of the important harbors are there piers. 

The Chairman. It has been said that the owners of the present 
piers at San Juan are apt sometimes to abuse their powers. 

Governor Winthrop. There is at the present time competition in 
shipping from the United States. A new company has recently been 
started, and of course that company is greatly handicapped by the 
absence of wharves and piers. 

The Chairman. Would it be your idea that such piers should be 
owned by the municipalities or by the insular government, or that 
there should be private ownership ? 

Governor Winthrop. I should prefer to see them owned by a 
company, with sufficient restrictions guaranteeing to all shippers an 
equal right to the use of the piers, or else they should be owned by 
the insular government. 

The Chairman. We have now before us two propositions—two bills, 
rather. • One of them contains a proposition to grant a franchise to a 
private individual. This special bill contains also a schedule of rates 
and charges, and provides that the whole matter is to be under the 
control of the executive council. We have another bill to confer 
general authority upon the Secretary of War to authorize the con¬ 
struction of wharves and piers in the navigable waters of Porto 
Rico. It is your idea, you say, that the legislation should be general, 
rather than specific. 

Governor Winthrop. I should like it to be general in every in¬ 
stance. 

The Chairman. We have been told that the city of New York, 
where there was private ownership of piers, found that that led to 
great abuses, and that that city has been purchasing practically all 
of its wharf frontage. 

Governor Winthrop. If you gave the general authority to the Sec¬ 
retary of War that would not necessarily affect the question as to 
whether the insular government or private parties should own the 
piers. But I think that general authority would be better than legis¬ 
lation for individual cases. 

Mr. Rucker. Should not any license that may be granted by the 
Secretary of War be required to be accompanied by a restriction that 


124 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

would ultimately enable the insular government or the municipality 
to take possession of these wharves, or to purchase them at a fair 
price, or be purchased at an appraised valuation ? 

Governor Winthrop. I think so. 

Mr. Rucker. And he be given broadly the power generally to grant 
licenses to any persons for the building of these wharves. The Sec¬ 
retary of War or some other official should be granted the power 
that might otherwise be greatly abused—not that it would neces¬ 
sarily be, but it might be. 

Governor Winthrop. I always liked that clause which provides 
for the purchase of the franchise at any time. 

The Chairman. It is now 12 o’clock, and we must adjourn. Can 
you be with us some time next week, Governor? 

Governor Winthrop. Yes, sir; any time next week. 




AMENDMENT OF PORTO RICAN CIVIL GOVERNMENT 

ACT. 


Committee on Insuuar Affairs, 

House of Representatives, 

Tuesday , April 10 , 1906. 

The Committee on Insular Affairs met at 10.30 a. m., Hon. Henry 
Allen Cooper in the chair. 

STATEMENT OF HON. BEEKMAN WINTHROP—Continued. 

The Chairman. There are some other subjects, Governor, that were 
touched upon in the testimony of Mayor Todd and Mayor Buso to 
which I wish to call your attention. Mayor Todd spoke of the reor¬ 
ganization of the paymaster’s department, saying that there had 
been an auditor or a paymaster for each department, which he gave 
us to infer was, in his judgment, entirely sufficient for the purposes 
of the insular government, and that, unnecessarily, a sort of pay¬ 
master or auditor in chief had been appointed, who is drawing a very 
handsome salary, and that his duties were largely perfunctory. 

Governor Winthrop. That is an entirely erroneous impression. 
There was a paymaster for each department, and the administrative 
officers of the insular government in talking it over thought that the 
system not only met the needs, but that it was too great for the 
needs of its government, and that a large economy could be secured 
by establishing one paymaster for the whole government instead of 
one paymaster for each department. I may say that this action 
which was taken at that time was approved by members of the 
lower house of the insular legislature. As soon as the action was 
proposed, I called in the speaker of the lower house and several of 
the prominent members of that body, and outlined what the execu¬ 
tive council intended to do; and I asked them to take the scheme 
and talk it over with the other members of the lower house, and that 
if it was not agreed to no action would be taken by the executive 
council until the legislature met again in session. 

The speaker of the house of delegates and the other members 
present took away the plan, consulted with the other members of the 
house of delegates, and returned it to me in about two weeks with 
one or two changes in it, stating that they desired their amendments 
to be inserted. I asked them if they wished to have it done at once, 
in the interest of economy, or whether they desired to have it wait 
until the legislative session. They said that they wanted it done at 
that time. It was fully ratified by a meeting of the legislative assem¬ 
bly at the last session just passed. 

Mr. Rucker. When was the last session? 

Governor Winthrop. The last session ended on the 9th of March 
of this year. 

Mr. Rucker. That change by the executive council in the interest 
of economy, when was that made ? 

Governor Winthrop. In last July—the 1st of July. 


125 



126 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Rucker. Evidently it had not come to Mayor Todd’s notice 
that the change had been made. 

Governor Winthrop. You mean the ratification by the legislative 
assembly. 

Mr. Rucker. As I understand, the change made in the interest of 
economy was to correct the very matters that he spoke of here. 

Governor Winthrop. Oh, no. He complained of the action of the 
executive council in the matter. 

The Chairman. In the testimony of Mayor Todd I find this: 

In April or May the council met and decided to disregard the provisions of 
that appropriation act with regard to the disbursing officers, and created a cen¬ 
tral disbursing office, fixing the salaries of those officials, and doing avvay with 
the entire organization as provided for by the appropriation act. Against this 
action was the vote of the five Porto Ricans, but the six American members of 
the executive council put that so-called act into effect. 

Governor Winthrop. That is incorrect. The vote stood 7 to 4 in 
the executive council. 

Mr. Page. On what page of the hearings is that ? 

The Chairman. I have referred to the testimony on page 11. 

Mr. Larrinaga. You say the vote was 7 to 4, Governor ? 

Governor Winthrop. Yes. 

Mr. Larrinaga. I was only asking for information. 

Governor Winthrop. I have a certificate here, if you would like to 
see it, Mr. Larrinaga—a certificate from the executive council. 

The Chairman. Please read it. 

Governor Winthrop (reading) : 

[Extract from minutes of proceedings of the executive council June 3,1905.] 

Executive Council, Porto Rico. 

* * * Mr. Willoughby moved that the several disbursing offices of the 

insular government be consolidated into one office and that a special bureau of 
disbursements, to be presided over by a single disbursing officer, be created, such 
consolidation to take effect on the 1st day of July, 1905, and such special 
bureau to be under the direction of the Treasury Department. 

The motion was agreed to by the following vote: 

In the affirmative were: Messrs. Crosas, Elliott, Falkner, Feuille, Hynes, 
Post, and Willoughby—7. 

In the negative were: Messrs. Barbosa, del Valle, Diaz, and Sanchez—4. 

A true copy. 

W. P. Bennett, 

Chief Clerk Executive Council . 

The Chairman. Mr. Crosas— who is he? 

Governor Winthrop. He is a very distinguished Porto Rican, who 
was educated in the United States. He has resided in Porto Rico all 
his life, with the exception of the time he has been in the United 
States. 

Mr. Larrinaga. In the United States and Mexico. 

Governor Winthrop. And Mexico alone. 

Mr. Page. What position does he hold ? 

Governor Winthrop. He is the director of the department of 
health, charities, and corrections. 

Mr. Rucker. And was appointed by whom ? 

Governor Winthrop. As member of the executive coitncil by the 
President of the United States. 

Mr. Larrinaga. Do you consider Mr. Crosas a native Porto Rican? 

Governor Winthrop. I most assuredly do. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 127 

, Larrinaga. He always registered at the American consulate 
during Spanish times. 

Governor Winthrop. He was a naturalized American citizen. 

Mr. Larrinaga. He was always registered at the American con¬ 
sulate there. He always sympathized with the Americans. 
TTr^°y ernor Winthrop. We can not criticise him for his sympathies. 
Was he not born in Porto Rico? 

Mr. Larrinaga. I can not criticise anybody for being in sympathy 
with his own people. & J 1 J 

Governor TV inthrop. Do you wish to criticise him for his sympa¬ 
thy to the Americans ? 

Mr. Larrinaga. No; I hold this, that he is an American and not 
a native Porto Rican in the spirit in which the Foraker Act makes 
those five members of the executive council Porto Ricans. 

Governor Winthrop. That is a judicial question; but I do not 
agree with you. 

Mr. Larrinaga. He always registered at the American consulate. 
He is a fine, distinguished gentleman, but he never considered him¬ 
self a Porto Rican until the Americans went there, although he sym¬ 
pathized with the Porto Ricans. 

Mr. Page. You do not dispute the fact that he was born in Porto 
Rico? 

Mr. Larrinaga. No; I believe he was. His family was American. 

Governor Winthrop. Both he and his father were born in Porto 
Rico? 

Mr. Larrinaga. I do not know. They came from a family by the 
name of O’Farrell, who are Irish. 

Governor Winthrop. Is not O’Farrell a Spanish name. 

Mr. Larrinaga. No; a name to be found also in Spain. 

Mr. Page. Prior to the American occupancy of Porto Rico was this 
gentleman an American citizen? 

Governor Winthrop. I believe he was a naturalized American citi¬ 
zen. Mr. Chairman, may I include in my testimony a copy of my let¬ 
ter to you in reference to the statements made 'before the committee 
by the other witnesses, touching upon the meeting of the governor 
with the heads of the executive departments, and also two other let¬ 
ters I received from Mr. Sanchez Morales, who was not present on the 
island at the time the letter was written ? 

The Chairman. Yes. 

(See letters appended, Appendix A.) 

Mr. Rucker. It seems, with reference to this particular matter— 
and I am really not sufficiently advised to talk about it intelligently, 
probably—but it seems that the issue here now is not whether the 
native Porto Rican voted one way and the Americans the other. It 
occurs to me that it does not make much difference. The question is 
whether it was right or regular; and the fact that a man whose father 
^vas born in Porto Rico or who himself was born in Porto Rico, but 
who received his education in this country and is a citizen of the 
United States, and voted with the native Porto Ricans, does not, it 
seems to me, throw very much light on the question as to whether it 
was passed by the Porto Ricans or whether that action was taken or 
not. 

The Chairman. The governor said, I believe, that it had been rati¬ 
fied by the Porto Rican legislature since this testimony was taken. 


128 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Governor Winthrop. On the 9th of March last. 

Mr. Hubbard. You submitted this action last year? 

Governor Winthrop. Yes. It came up in the appropriation bill 
for the salaries of the departments for the next fiscal year. 

Mr. Rucker. How many members compose the lower house ? 

Governor Winthrop. Thirty-five. 

Mr. Rucker. They are elected by the people ? 

Governor Winthrop. Elected by the people, five from each district. 

Mr. Rucker. Their action is always controlled by the executive 
council—that is, by its concurrence. 

Governor Winthrop. No more than the council is controlled by 
the house of delegates. Whenever there are two houses of a legis¬ 
lature both must concur. 

Mr. Rucker. Yes; but the United States holds the balance of 
power in this case. These six Americans can control the action of 
the executive council. 

Governor Winthrop: If they see fit. But they never have. Since 
I have been in the island the six Americans have never voted against 
the five natives. 

Mr. Hubbard. The appropriation acts originate in the lower house, 
do they? 

Governor Winthrop. No ; they originate in the upper house. They 
are sent to the lower house. 

Mr. Hubbard. That is one of the matters of complaint here, as I 
remember—that the appropriation acts should originate with the 
lower house, with the elective branch of the legislature. 

Governor Winthrop. I do not think that that was brought out. 

Mr. Larrinaga. We never looked at that. You will see that my 
bill is worded in that form, because we Porto Ricans believe that the 
appropriation bills should originate in the lower house. 

Mr. Hubbard. It was from your bill, then, that I got the idea. 

Mr. Larrinaga. No; it is the sentiment of the Porto Ricans, 
although the governor does not seem to have heard any complaint 
about it. 

Governor Winthrop. I did not know that there was any com¬ 
plaint. I thought that the objection was to the provision in the For- 
aker Act which authorizes the executive council to fix the salaries 
and direct how they shall be paid. I do not think, if you will allow 
me to say so, that there is any objection to the fact that the appropria¬ 
tion bills originate in the upperdiouse. 

Mr. Larrinaga. Oh, yes. I remember distinctly that in speaking 
with my friends there—representatives of the political parties there— 
that they insisted upon that feature going into my bill. That is the 
general sentiment. Of course you may not have heard of it in a 
concrete manner, except in regard to the fixing of salaries. But the 
fact is that the sentiment exists there. They know that it is the 
American practice, and they like it very much, and they think that it 
ought to be that way in Porto Rico. 

Mr. Parsons. But, isn’t it six of one and half a dozen of the other ? 
As the executive council is now formed the members practically sub¬ 
mit the budget by its going to the executive council. And then the 
lower house changes it, does it not ? 

Mr. Larrinaga. You mean that it amounts to the same thing? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 129 

Mr. Parsons. If the lower house had to pass <he budget first you 
would none the less have to have the budget proposed by the heads of 
the departments who are in the executive council, just as here we get 
the estimates from the Secretary of the Treasury—the estimates 
proposed by the heads of the various Departments. 

Mr. Larrinaga. But it is not in that way that they are worked 
here. How would you feel if the Senate should do it for you instead 
of the House ? 

Mr. Parsons. If a majority of ihe Senate was composed of the 
heads of Departments and they would have to submit the estimates, it 
would not make much difference whether they passed the budget 
first or last, as long as there was a written communication saying that 
these were their estimates. I do not see what difference it would 
make. 

Mr. Larrinaga. My question was, How would you American people 
feel about it if things were done in that way here ? 

The Chairman. I think that we will proceed with the testimony 
now. Something was said by Mayors Todd and Buso concerning 
the destruction of schoolbooks once a year, and the consequent unnec¬ 
essary expense entailed upon the people of Porto Rico. What would 
you say as to that statement ? 

Governor Winthrop. That statement is absolutely false. 

Mr. Rucker. Is Mayor Todd in the city now ? 

The Chairman. No. 

Mr. Rucker. I want to say, with all respect, that it seems to me 
hardly fair to him that this cross-examination should be conducted 
in his absence, when he has no opportunity to explain what he meant 
if he made statements which you say are not correct. 

The Chairman. When Mayor Todd made the statements he made 
no request that the governor should be here. We will give Mayor 
Todd an opportunity if he wants to be heard. 

Mr. Rucker. I am not his defender; but it does not seem fair to 
take up a man’s statements two or three months after they were made 
and criticise them in his absence. I say that because I was impressed 
when I heard him before this committee. His statement seemed to 
be very candid and exceedingly guarded, and he made no criticism of 
the governor or of the officials in the island whatever, except as to 
policies which he thought in some instances were wrong—with the 
exception of one or two cases where he referred to the intoxication of 
certain officials. 

The Chairman. The question which I asked was only concerning a 
statement from his testimony, that the schoolbooks were destroyed, 
and that thereby there was unnecessary expense. 

Mr. Rucker. And the witness answered that the statement was 
absolutely untrue. 

The Chairman. We have got to hear both sides of the question. 
We certainly heard Mr. Todd in the absence of all the people to whom 
he referred. 

Mr. Rucker. Well, I have absolute confidence in the witness now. 
At the. same time I do not feel that Mayor Todd wantonly made a 
false statement. 

Governor Winthrop. I did not say wantonly. 

The Chairman. In that connection it would seem to me to be alto¬ 
gether fair also to hear both sides before making up our minds as to 

35815—08-9 


130 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

the real merits of the controversy; and, therefore, I asked Governor 
Winthrop specifically what he had to say concerning the statements of 
Mayor Todd about w T hich there is dispute. 

Governor 'Winthrop. There are no schoolbooks burned by the gov¬ 
ernment. Every year schoolbooks that are found to be unfit for use 
in the schools, either through the leaves being torn or from being in a 
filthy condition, are marked with dye along the edges of the book, so 
that they can not be substituted in inventories at a subsequent date. 
They are then distributed to the children in the outlying districts who 
are not near enough to the district schools to attend them. The 
amount so distributed in the last fiscal year was If per cent; the 
amount distributed the year before was 2§ per cent.of the schoolbooks 
in use. In the fiscal year 1902-3, some four years ago, some books 
were destroyed. At that time 6^ per cent of the books which had been 
in use since the American authorities had come to Porto Rico were 
found to be in such a filthy and dilapidated condition that it was 
thought best to burn them for sanitary reasons; but since that date 
no books have been burned. There has been more care taken of them, 
and they have been distributed to the children in the outlying dis¬ 
tricts. 

Mr. Page. Since the American occupancy of the island has there 
been an entire change or any material change in the text-books in 
use in the public schools—different kinds of books? 

Governor Winthrop. Since Spanish times? 

Mr. Page. Y es. 

Governor Winthrop. I suppose there has. 

Mr. Page. I mean have the Americans made a change since their 
occupancy from those first introduced ? 

Governor Winthrop. From time to time, as the books are dis¬ 
tributed and newer books come out, those books that are distributed 
are substituted by newer books; but they have to wait until the older 
books are worn out. 

Mr. Crumpacker. Mr. Page means have new text-books been 
adopted ? 

Governor Winthrop. When new books come out, they do adopt 
them from time to time; but they wait until the old ones are dis¬ 
tributed, and then the newer models are substituted. 

Mr. Olmsted. If they destroy only 1 per cent a year, it would be 
one hundred years before the old ones are all destroyed. 

Governor Winthrop. They would not wait until all the old ones 
are destroyed. 

Mr. Olmsted. Would they have two sets of text-books in operation 
at the same time in the same school ? 

Governor Winthrop. I suppose they try to obviate that. The 
schools, moreover, are increasing from time to time, and more books 
are required. 

Mr. Olmsted. Does the governments buy the books, or do the chil¬ 
dren or their parents buy them ? 

Governor Winthrop. They are bought by the government. The 
people are too poor to buy them. 

Mr. Olmsted. When you say from 1 to 2 per cent are destroyed 
during a fiscal year, can you give us any idea as to the number of‘the 
books destroyed and the estimated value of that 1 per cent? 



HEARING BEFORE HOUSE COMMITTEE OH INSULAR AFFAIRS. 131 


Governor Winthrop. I can give you the number of books, I think. 
I have here a letter from the commissioner of education to the chair¬ 
man which I think might be inserted in the testimony, if the com¬ 
mittee are willing. One and two-thirds per cent equaled 6,155 books 
last year. 

Mr. Olmsted. Can you give us any estimate as to the cost of those 
books ? 

Governor Winthrop. I can not. They were not destroyed. They 
were distributed. 

Mr. Page. Of course, as the years pass by and the original books 
have been long in use, the percentage of those that would be de¬ 
stroyed would be greater each year. The books, for instance, that 
were distributed to the children in 1901 by 1905 by natural process 
would have passed away. 

Governor Winthrop. You mean the books that the children bring 
to school with them. Yes; of course they wear out in the natural* 
process. 

Mr. Graham. I would suggest that the letter from the superin¬ 
tendent of instruction be included in the report of the hearing. 

The Chairman. Yes. Is it a long letter? 

Governor Winthrop. The part about the books is about three 
pages. 

The Chairman. We will have it inserted. My idea was whether 
we would take time to read it. 

Governor Winthrop (reading) : 

Department of Education of Porto Rico, 

Office of the Commissioner, 

San Juan, March 12, 1906. 

Hon. Henry B. Cooper, 

Chairman Committee on Insular Affairs, 

House of Representatives, Washington, D. C. 

Sir : I have the honor to call your attention to a number of glaring inaccu¬ 
racies and misstatements concerning the administration of schools in Porto 
Rico contained in the testimony of Messrs. Larrinaga, Todd, and Buso in the 
recent hearings before your committee. 

First. It is charged that there has been gross extravagance in the depart¬ 
ment of education through the lavish purchase of school books, made necessary 
by the wanton destruction of books at the end of each school year. (See p. 53- 
58 of the hearings.) 

The facts in the case are that an annual appropriation—not a large one—is 
made by the legislature each year for the purchase of text-books and school 
supplies and that a number of books—not a large one—has to be set aside each 
year because too dilapidated for further use in the schools. 

Tfhe annual appropriations covering both books and supplies are given below, 
together with figures of average daily attendance of pupils, showing the growth 
of the school system. 


Fiscal year. 

Appro¬ 

priation. 

Pupils 

attending. 

1902 . 

$30,000 

32,000 

29,000 

29,457 
* 34,272 
41,798 
45,201 
(«) 

1903 .... 

1904 . 


35,000 


25,000 



a Not yet available. 


The number of pupils to be supplied is, of course, in excess of the average 
attendance probably from 20 to 30 per cent. As there are very few communi¬ 
ties where the cost per pupil of books and supplies is less than $1, it can be 














132 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


seen that the schools are being conducted upon a most economical basis, espe¬ 
cially when the rapid growth of the system and the higher cost of books and 
supplies due to transportation charges are considered. 

At the beginning of the fiscal year 1902-3 there were in the island 295,72.1 
schoolbooks. Many of them had been in use since the early days of the military 
government. As there had been no general condemnation of worn-out books 
before this time, it was found on examination that a considerable number of 
books—18,033 in all, or 6i per cent of the books—in use were unfit for further 
service. So many of the latter were in a filthy and dilapidated condition that 
for sanitary reasons the whole number was burned. 

In subsequent years the books have been carefully reviewed each year, and 
worn-out books have been condemned in most of the districts. The condemna¬ 
tion is made in the district headquarters by an officer from the central office, 
under instructions that no book is to be condemned unless it is so damaged that 
it will not hold together ‘or unless pages are missing. As the books are not 
allowed to get into the dilapidated condition found in so many cases in 1903, 
it is no longer considered necessary to burn the books. The edges of the books 
are marked with aniline dye to prevent the substitution of such books at a 
later date for books on the inventories, and are given to the district superin¬ 
tendents for distribution to children unable to attend school. 

The number of books so condemned and distributed in the fiscal year 1904 
was 9,751, or 2§ per cent of the books in use. In the following year, 1905, the 
number was 6,155, or If per cent of the books in use. 

As there is no wanton destruction of books, it is perhaps unnecessary to 
speak of the alleged reason for the alleged destruction—namely, that there was 
a constant change in text-books to meet the wishes or whims of the commis¬ 
sioner. I would only call attention to the fact that in my annual report of 
1905 (S. Doc. 60, 59th Cong., 1st sess., p. 18) I distinctly state that new text¬ 
books can not be introduced at once. Referring to a report made to me by a 
competent committee on the best books for use, it is said: “As the books now 
in use become dilapidated and worn they will be replaced by the standard books 
adopted by the department.” 

Enough has been said to show that the declaration made before your com¬ 
mittee that all the books in use in the schools of the island were annually 
brought to San Juan and burned is utterly false. It is incomprehensible that 
such a statement could be made by persons having access to the olficial reports 
of the department of education. * * * 

Very respectfully, Roland P. Falkner, 

Commissioner of Education. 

The Chairman. There is another point in the testimony of Mayor 
Todd to which I wish to call your attention. In speaking of the 
concessions for the construction of railroads from San Juan to Ponce, 
the concessionaires failed to build, and he said that the concessionaires 
deposited a bond of $100,000 to secure the carrying out of the fran¬ 
chise according to its terms, and $10,000 in cash; and then he said 
that the $10,000 in cash was returned to them, and that the bond was 
destroyed, and that the Government has taken no action upon it. 
That testimony is found on page 60, the question being this: 

The Chairman. Do you say that the people who had secured that franchise 
deposited a bond for .$100,000 to secure the carrying out of the franchise accord¬ 
ing to its terms? 

This is the testimony of Mr. Larrinaga: 

Mr. Larrinaga. Yes, sir; and $10,000 cash. 

The Chairman. And that the $10,000 was returned to them and that the 
bond has disappeared? 

Mr. Larrinaga. Entirely; and no responsible party has been found to make 
that amount good, while under the old law everybody who deposited a dollar 
there lost it for the benefit of the treasury of the island when they failed to 
carry out the conditions of the franchise. 

The Chairman. When you say the “ old law ” do you mean under Spanish 
dominion? 

Mr. Larrinaga. Yes, sir. It was not only a Spanish law, but it was enforced 
or some time under the American regime. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 133 

Governor Winthrop. In that Mr. Larrinaga was entirely mis¬ 
taken. The $10,000 to which he refers here was the $10,000 sub¬ 
mitted with the bid for the franchise. The franchise provided that 
when it was accepted the $10,000 cash deposit should be returned to 
the grantees, and they should give a $100,000 bond. A contract has 
been entered into with a lawyer to sue on that bond. I made the 
arrangements last November when I was here. It was necessary to 
secure the authority from the legislative assembly to allow me to 
make the agreements with this lawyer. On the same day that Mr. 
Larrinaga made that statement a bill was introduced authorizing me 
to employ a lawyer. The lawyer was employed, and the bond will 
be sued on. 

The Chairman. Where is the bond ? 

Governor Winthrop. It is in the hands of the attorney-general. 

The Chairman. What are the sureties? 

Governor Winthrop. The sureties are the Union Surety Company, 
of Philadelphia, and the Title Guarantee and Trust Company, of 
Scranton, Pa. 

The Chairman. What reasons were given by the concessionaires for 
failure to carry out the concession ? 

Governor Winthrop. They thought the terms were too severe for 
them, I believe, and they could not secure money on the franchise to 
construct the road. I think, myself, it was an absolutely impractica¬ 
ble scheme to construct a railway across the mountains from San 
Juan to Ponce. It is very hard country to build over, especially from 
Cayey or Caguas to Coamo. 

Mr. Crumpacker. What damages, if you have ever been advised 
upon that subject, can be recovered upon the bond? Is it written in 
the bond as liquidated damages? 

Governor Winthrop. That is what we maintain. I trust that the 
courts will decide that way. 

Mr. Crumpacker. It is a pretty interesting question. 

Mr. Graham. Was it proposed to use the military road or to build 
outside ? 

Governor Winthrop. To build outside. 

Mr. Larrinaga. I see that the $100,000 bond is the question now, 
and it has not been collected, though they are trying to collect. But, 
in regard to the $10,000 cash deposit, it was understood, and I read 
again and again in the press, that it was a security, because we could 
never understand how a party could have made a deposit of cash until 
he had gotten a concession; and then the minute he got it, just at the 
moment when his responsibility would begin, he would be allowed to 
withdraw the whole $10,000. I say that to account for my error, if 
there were any error. 

Governor Winthrop. The franchise can be seen by anyone who de¬ 
sires to see a copy of it [reading from a copy of franchise] : 

Upon the approval and acceptance of said bond the- sum of ten thousand dol¬ 
lars now on deposit with the treasurer of Porto Rico as a guaranty of the ac¬ 
ceptance by the grantee of this ordinance shall be returned to the grantee. 

That was in the printed form of the franchise, and open to anyone 
who desired to investigate it. . 

Mr. Olmsted. The $10,000 was to stand as security until the 
$100,000 bond was given. 

Governor Winthrop. Yes. 


134 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Hubbard. It would stand as security that they would enter 
into the contract. 

Mr. Parsons. Qualify them as bidders ? 

Governor Winthrop. Yes. 

Mr. Hubbard. That is very commonly done. A person deposits a 
certified check that he will enter into the contract. 

Mr. Larrinaga. That is very true; but this $10,000, it seems, was 
not deposited as a temporary guaranty, as in the public press, in all 
the newspapers, this same criticism was made, and it was then con¬ 
tended that it was an error On the part of the executive council, and 
nobody came out to contradict those statements! 

Mr. Hubbard. It was plainly a misunderstanding. 

Mr. Larrinaga. I hope it was. 

Mr. Olmsted. The same thing is done in Pennsylvania. 

Mr. Graham. It is either that, or a bidder’s bond is given for a 
small sum that the parties will enter into the other bond afterwards. 
The first bond is the bidder’s bond. 

Mr. Olmsted. There is one question that I want to ask on the 
schoo t lbook problem. If I correctly understood the letter, the highest 
number of scholars was 45,000? 

Governor Winthrop. I believe that was the average attendance. 

Mr. Olmsted. And there were 725,000 schoolbooks? 

Governor Winthrop. No; in 1903 there were 295,000 schoolbooks, 
and the total number of scholars enrolled is 68,000. 

Mr. Olmsted. What is the highest number of schoolbooks? 

Governor Winthrop. Something over 295,000. I believe Mr. La¬ 
rrinaga made some remarks about the University of Porto Rico, on 
page 54 of the testimony. 

The Chairman. Certain money that was to be expended in the 
university was not expended. 

Governor Winthrop. Mr. Larrinaga made a serious mistake, which 
I believe he now admits. The university is not a part of the govern¬ 
ment. It was created by an act of the legislature of 1903, in which 
session Mr. Larrinaga was present and voting. I am informed that 
he voted for the law establishing the university under a board of 
trustees. It is established under a board of trustees consisting of six 
ex officio members, and six others to be appointed by the governor. 

The men whom I have appointed as those members I think are the 
best without exception that could be found in the entire island of 
Porto Rico. Their names are Mr. Francisco de Paula Acuna, who 
is a leading lawyer and a very good friend of Mr. Larrinaga’s; Mr. 
Bernardo Huicy, a sugar operator and friend of Mr. Larrinaga’s; 
Mr. Carlos Soler, who is a banker and an intimate friend of Mr. 
Larrinaga’s; Mr. Luis Munoz Morales, a leading lawyer and judge 
of the district court of Guayama; Mr. Degatau, former resident 
commissioner to Washington, whom I think you all know, and Mr. 
Edwin Arnold, who is manager of the American Colonial Bank in 
Porto Rico. Those gentlemen are of the very highest order of 
men—the highest order of men that you could possibly find in the 
whole island of Porto Rico. 

The university was established in 1903. It was established for the 
purpose of creating a nucleus to which bequests could be made, and 
to secure through the Morrill and Hatch acts of Congress a certain 





HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS- 135 

sum given every year to State and Territorial universities for agri¬ 
cultural instruction. It was provided in the act that each year an 
appropriation should be made by the legislature for the support of 
the normal school (a branch of the university), and the appropria¬ 
tion was so made. That is the appropriation about which Mr. Larri- 
naga speaks—the $20,000 which is yearly appropriated for the use 
of the normal school, and not for any of the general needs of the 
university. The university, apart from the normal school, is sup¬ 
ported by one-half the fines collected in the island of Porto Rico, and 
by other small sums. We are trying to establish a practical agri¬ 
cultural school in connection with this university. 

The university trustees meet frequently to discuss matters pertain¬ 
ing to the university. They are the ones who make the allotments 
of funds for the university, of course, apart from the money that 
is appropriated directly for the normal school. They distribute 
that, and direct how it shall be used. They have direct charge of 
the university. The ex officio members consist of the governor, as 
honorary president; the speaker of the house of delegates; the attor- 
ney-general; the treasurer; the secretary, and the commissioner of 
education. 

Mr. Larrinaga. You say, Governor, that those honorable gentle¬ 
men—and I think that you will not find many who stand higher 
than they do—were appointed by you? 

Governor Wintiirop. Most of them were. 

Mr. Larrinaga. And when was the university established? In 
19 °3 ? 

Governor Winthrop. That is it. Do you want me to read the list 
of names of those who were former trustees ? 

Mr. Larrinaga. You have been trying to do your very best. 

Governor Winthrop. Mr. Francisco L. Verges is a good man, is he 
not ? 

Mr. Larrinaga. He is a good man, but he is not so well known as 
the others. 

Governor Winthrop. Do you know Mr. Fidel Guillermerty ? 

Mr. Larrinaga. Yes, sir. 

Governor Winthrop. You must admit he is an excellent man, al¬ 
though he is of a different political party from yours. 

Mr. Larrinaga. And so is Mr. Todd. 

Governor Winthrop. Some of these gentlemen were trustees in the 
early days also. 

Mr. Larrinaga. Let me ask you a question, Governor. Was there 
any building built for the university? Have any professors been 
appointed? Are there any classes pertaining to teachings of the 
university going on, or have there ever been any ? 

Governor Winthrop. We have an agricultural school there. I 
think your questions should rather be directed to the board of trustees, 
should they not? But the agricultural school is being conducted 
regularly right along. There is a corps, I believe, of two instructors 
and a farmer. And there are 28 pupils, four from each district. 

Mr. Larrinaga. That agricultural school is all right, I suppose. 

Governor Winthrop. The normal school is an adjunct, a part of 
the university. It is a practical school for the practical training of 
teachers. You remember that no other branches of the university 


136 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

have been established. I do not think that it was expected to estab¬ 
lish them at once when that law of 1903 was passed. So I have been 
informed by all. 

Mr. Larrinaga. Don’t you think, Governor, that such a bunch of 
distinguished people, of men of such high standing, make a rather 
too showy frontispiece for the entrance of a doorway that leads no¬ 
where? There is no university in fact. You know it. 

Governor Winthrop. That is the fault of the legislative assembty. 
It is the fault of the people who voted for it; and I believe that you 
voted for it. 

Mr. Larrinaga. If I voted for it, it was because I thought we were 
going to have the real thing. Don’t you think, Governor, that those 
gentlemen you appointed as trustees for the university would make 
an excellent elective senate? 

Governor Winthrop. If they were elected, they would make an 
excellent elective senate. I should be glad to have any or all of the 
gentlemen mentioned as members of the executive council. 

Mr. Larrinaga. Governor Winthrop has always had the tact of 
picking out the very best men in the island for any offices that were 
to be filled. 

Governor Winthrop. It is very kind of you to say that. 

The Chairman. Mr. Larrinaga said that before you came up. He 
did not reserve it for this occasion. [Laughter.] He also said that 
if all the men down there had been as tactful as you have been there 
would not have been any trouble. What about the employment of 
the lawyer to defend the people in the church suits? 

Governor Winthrop. I am very glad you brought that up. 

Mr. Parsons. I notice in the report of a year ago, the report of 
the treasurer of the University of Porto Rico, this treasurer’s state¬ 
ment in regard to the $20,000, and I think it would clear the question 
up a good deal if it were copied into the record. [Reading from 
report:] 

Exhibit IV.— Reports of the secretary-treasurer of the University of Porto Rico; 

principal of the normal department; principal of the practice school; director 

of agriculture. 

REPORT OF D. N. HANDY, TREASURER. 

University of Porto Rico, 

Rio Piedras, P. R., June 1, 190 4 . 

Sir: I have the honor to submit the following report on the work of the 
secretary and treasurer of the University of Porto Rico from July 1, 1903 to 
June 1, 1904. 

For the first part of this period the office was temporarily held by Mr. James 
H. A. Smith. On November 1, 1903, your present secretary, having duly quali¬ 
fied, was installed. 

During the year the routine work of the office—recording and keeping the 
minutes of the trustees, receiving and disbursing books and supplies, and caring 
for the property, and receiving and paying out, on approved bills, the moneys of 
the institution—has been duly attended to. 

The receipts and disbursements of moneys, which will be more minutely 
described in the treasurer’s annual report, to be issued later, have been to 
June 1, 1904, as follows: 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 137 

Treasurer's statement, July 1, 1903, to June 1, 190l h 

Received from treasurer of Porto Rico (James H. A. Smith, jr.), as 

per legislative appropriation, 1903-4_$21, 440. 00 

Paid out for salaries: 

Office of secretary and treasurer, including office ex¬ 
penses -$i, 498. 25 

Normal department— 

Normal school_ $7 ? 770. 54 

Practice school_ 4’ 995.13 

Agricultural school_ l’ 405 . 00 

Janitor service_ 877. 85 

^ - 15, 054. 52 

Contingent expenses_- 1, 875. 30 

- 18,428.07 

Balance of legislative appropriation, June 1, 1904_ 3,011.93 

Received from other sources_ 203. 99 

Balance available_ 3 , 275. 92 

In other words, all excepting $1,498.25 was expended for the normal 
school, practice school, and only $1,405 for the agricultural school 
which was intended to be established by the university. So that the 
money is all accounted for. 

Governor Winthrop. Yes; and allow me to state that the $1,498.25 
mentioned was, I believe, subsequently paid from university funds, 
apart from the normal school appropriation, and reimbursed to that 
appropriation. Although the university is outside the government— 
is not a part of the government—I suggested to the board of trustees 
at the first meeting, at which I was present, that it would be advisable 
to have a very careful system of auditing, and as the auditor claimed 
that the university was outside the government, and that therefore 
he had no legal jurisdiction over it, I made a suggestion that the 
board of trustees request him as a favor to audit their accounts. 
They acted upon my suggestion, and the auditor has done so. 

The Chairman. Now, as to the church litigation. 

Governor Winthrop. When I went down there in July, 1904, I 
found that there was pending very important litigation between the 
church and the insular government. I believe that the value of the 
property amounted to nearly $500,000, according to the church’s esti¬ 
mate. The legislature in January, February, and March, 1904, 
passed an act directing the supreme court to hear those cases. Con¬ 
sequently they were pending, and it was necessary to take action at 
once. The church had brought suit. I consulted with my prede¬ 
cessor, with the attorney-general, and with other officers, and in their 
opinion—and I may say I found this opinion was absolutely correct— 
it would have been impossible for the attorney-general at that time 
to have devoted the necessary time to these cases and continue his 
regular work. I had the right to employ counsel under the authority 
given to me by the legislature. 

The legislature has given me authority to employ counsel when¬ 
ever any suit is brought against the government affecting title to 
property. There was a lawyer who made application for the case, 
but as soon as I saw him I felt that he was not the proper man, and 
his offer to Governor Hunt was so excessive that we decided that it 
would not be worth while to consider him. In looking around for 
the best man I could get, I selected a gentleman who, I think, is one 
















138 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

of the best lawyers down there; and I made a contract with him which 
I think was a very small fee, considering the amount of work he had 
to do. The amount was $10,000 through the Supreme Court of the 
United States. He was also to pay all stenographic and translating 
expenses, and should the case not be carried to the United States, his 
fee would be $7,500. The mass of testimony to be translated, and the 
stenographic work was enormous, and many lawyers, both then and 
now, have told me that they thought that that was a very reasonable 
fee. 

Mr. Olmsted. What became of the cases? 

Governor Winthrop. The cases are still being tried. 

Mr. Olmsted. In what court are they pending? 

Governor Winthrop. In the supreme court of Porto Rico. 

Mr. Olmsted. Has there been any decision by any intermediate 
court ? 

Governor Winthrop. No. The supreme court had original juris¬ 
diction. 

Mr. Rucker. Ten thousand dollars, you say, was the fee for a num¬ 
ber of suits involving in the aggregate $500,000 worth of property ? 

Governor Winthrop. That is the amount at which the church esti 
mates the property. 

Mr. Rucker. There is no question but that -the fee was very reason¬ 
able. 

Governor Winthrop. The other lawyers think I was very mean 
about it. 

Mr. Rucker. I think so myself. 

Governor Winthrop. You are a lawyer, and you ought to know. 
And then having the translating and v stenographic expenses also, I 
think the lawyer would not be very glad to get another such case on 
similar terms. 

The Chairman. Something was said in the previous testimony be¬ 
fore the committee, and that testimony has elicited a great deal of 
criticism in the press of the country, as to the intemperate habits of 
certain officials who have gone down to Porto Rico from the United 
States. How about that ? 

Governor Winthrop. That is a very wrong statement. Since I 
have been down there (twenty-one months) there has been only one 
official of the government, that I know of, who has become intoxi¬ 
cated, and he was immediately recalled. He has been dressed up in 
so many different guises and shapes and made to appear in so many 
different conditions that he presents an army in himself. There was 
another subordinate employee who, I think, did become intoxicated 
and was immediately dismissed. But, with the exception of these 
two officials, I know of no American insular government official in 
the island of Porto Rico who has become intoxicated since I have 
been there. 

The Chairman. How long did that man remain as an appointee 
of the American Government after his arrival ? 

Governor Winthrop. His resignation was asked for, I should say, 
within two weeks, though he remained on the island some weeks 
longer. 

The Chairman. Was he intoxicated all that time? 

Governor Winthrop. Well, in those two weeks he was either in¬ 
toxicated or suffering from the effects of intoxication. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 139 

Mr. Rucker. Was he the man who was drunk when he got there? 
Did you send him away in that condition? 

Governor Winthrop. I think he was sober at the time he left. I 
want to ask Mr. Larrinaga if he knows of any other cases? 

Mr. Larrinaga. No. 1 think that it would be fair to Mr. Todd to 
say that he did not state that to be the common case. Our people are 
sensible, and even the press did not say a word about it. 

Governor Winthrop. That is true. The press behaved well. 

Mr. Larrinaga. I do not think that those gentlemen intended to 
bring it out in that light. 

Governor Winthrop. On page 48 Mr. Todd speaks of the drink¬ 
ing, and Mr. Rucker says: u You say that occurred frequently?” 
Mr. Todd answered: “ Frequently.” 

The Chairman. Let me read from the testimony of Mr. Todd on 
page 47, at the bottom of the page: 

The Chairman. It is a fact, is it not, that the Porto Ricans have always been, 
and now are, a very temperate people, so far as the use of intoxicants is con¬ 
cerned? 

Mr. Todd. Very temperate. But in respect to the drinking habit among the 
officials I can mention many instances among American officials, although these 
cases are not so unfortunate as that of the attorney-general, who was obliged to 
go to the hospital. However, in some cases officials have been picked up in the 
streets and taken to their homes, and while under the influence of liquor have 
threatened the natives with their guns; but on the next day, when they were 
sober, they would go back to business and nothing was said. 

Mr. Rucker. You say that that occurred frequently? 

Mr. Todd. Frequently. 

That would appear to me, Mr. Larrinaga, as an accusation of fre¬ 
quent intoxication among the Americans. And this alleged drunken¬ 
ness has elicited very severe criticism on the part of the press of this 
country. I have seen many newspaper notices of it. 

Mr. Larrinaga. My appreciation of the thing is that the assertion 
is rather too broad. I do not think, to be fair, that that statement, 
if so made, would be correct. 

Governor Winthrop. Do you know of any other cases except those 
two officials I have mentioned ? 

Mr. Larrinaga. Not any official of any importance. 

Governor Winthrop. Of importance or unimportance? 

Mr. Larrinaga. I bother myself so little about that, and I associate 
with people of that kind so little, that I have no opportunity of 
observing. [Laughter.] 

Governor Winthrop. But you have not heard of them ? 

The Chairman. You do not have to associate with them to see them 
drunk. [Laughter.] 

Governor Winthrop. I may say that we have only 313 American 
officials in the insular government, and it is therefore not very diffi¬ 
cult to keep an eye on them. 

The Chairman. How is it as to the comparative number of Porto 
Ricans and Americans employed in the insular government ? 

Governor Winthrop. I stated that in my annual report on page 41. 
There are in the insular government at the present time, or when I 
wrote that report—and they have been diminished rather than in¬ 
creased—313 Americans as compared to 2,548 Porto Ricans. 

The Chairman. Do these Porto Ricans occupy positions of the 
same importance ? 


140 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Governor Winthrop. Yes; the chief justice, of course, is a Porto 
Rican, and a very excellent man he is. And two of the other judges 
of the supreme court are Porto Ricans. Seven of the district judges 
a re Porto Ricans. 

The Chairman. Seven out of how many ? 

Governor Winthrop. Seven out of the eight district judges. Six 
out of seven of the district fiscals. 

The Chairman. A “ fiscal ” is a prosecuting attorney ? 

Governor Winthrop. A prosecuting attorney ; and you will see in 
the totals which I gave on page 41 of my annual report to the Presi¬ 
dent I have divided the employees into three classes as to salaries, the 
number paid $2,000 per annum or over, the number paid from $1,000 
to $2,000, and the number paid less than $1,000 per annum. 

The Chairman. How many Porto Ricans receive $2,000 or over ? 

Governor Winthrop. Thirty-eight Porto Ricans and 32 Americans. 

The Chairman. How many receive other salaries ? 

Governor Winthrop. Porto Ricans, 169, as compared with Amer¬ 
icans, 163, receive from $1,000 to $2,000. Of the number paid less 
than $1,000 per annum, 2,341 are Porto Ricans and 168 are Americans. 
And I may add that since I have been down to the island, with the 
exception of a case where I transferred an American judge from one 
district to another, I believe that I have appointed but two Americans 
to any positions carrying salaries; all the others are Porto Ricans. 

The Chairman. It is your general policy, I gather from your an¬ 
swer, to appoint Porto Ricans where it is possible to find them. 

Governor Winthrop. Undoubtedly; and as time goes on I think 
that we should do it more and more. There are a number of men who 
are learning American ideas, and there are a number of young men 
who have been to the United States and been educated here, and they 
make valuable assistants, because they have a knowledge of American 
ideas and they can adapt American principles to the island’s needs. I 
think that we should more and more, as I am trying to do, encourage 
those men to take part in the government. 

The Chairman. Three out of five of the justices of the supreme 
court are Americans ? 

Governor Winthrop. That is true. 

The Chairman. And among those three is included the chief 
justice? 

Governor Winthrop. Yes. 

The Chairman. Seven out of the 8 district judges are Porto Ricans. 

Governor Winthrop. Seven out of the 8; and all of the municipal 
judges excepting one, and all of the justices of the peace. 

The Chairman. How many municipal judges are there? 

Governor Winthrop. Twenty-four, I think. 

The Chairman. Twenty-three out of the 24 are Porto Ricans. 
How many justices of the peace are there? 

Governor Winthrop. Approximately, 63. 

The Chairman. How many of those are Porto Ricans? 

Governor Winthrop. All. * The one municipal judge who is not a 
Porto Rican was elected unanimously by the people of his district. 

The Chairman. Who is he? 

Governor Winthrop. Judge Schoenrich. 

The Chairman. An American? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 141 

Governor Winthrop. Yes; an American. He married a Porto 
Rican lady; and he has taken up his life down there. 

The Chairman. He was elected by the people ? 

. Governor Winthrop. Elected unanimously. There was no oppo¬ 
sition whatever, and in one of the most important towns in the island. 
9 ' The Chairman. What do you find there as to the desire of the 
people to be created American citizens ? 

Governor Winthrop. A very great desire. Very great, indeed. 

The Chairman. What do you think of the proposition? 

Governor Winthrop. I think that it is most important. They 
should be granted American citizenship. It is the only thing, I 
think, which rankles a great deal in the minds of all the Porto Ricans 
w r ho care for the United States—the fact that they are not conceded 
the rights of American citizens. They feel that they are regarded 
by us as inferior beings. As in Spanish times they w T ere classed as 
Spaniards, they can not see why under a mqre liberal form of govern¬ 
ment they should not have the same rights. I think that the grant¬ 
ing of American citizenship would do a great deal to increase the 
affection with which the people regard the United States Govern¬ 
ment. I desire the distinction between “Americans ” and “ Porto 
Ricans ” to be eliminated, and this can be done only by making Porto 
Ricans American citizens. 

The Chairman. Do you believe that they think that the United 
States is never going to relinquish the island ? 

Governor Winthrop. Undoubtedly. I do not think that there is 
any belief among the people that they will ever have independence. 
You see the island could not exist without the United States, because 
the commerce is almost entirely with the United States. As soon as 
it has a protective duty on coffee as it has on sugar and tobacco, the 
prosperity of the island is assured. Of course, what we all want is a 
protective duty on coffee. Coffee has always been the most important 
of the products of the island, because it is the poor man’s crop. It 
distributes the wealth more evenly. In 1896 they had the very largest 
crop in the history of the island. The prices were high. 

Subsequently, when the Americans came there in 1899, they had 
one of the most severe hurricanes in the history of the island. It 
destroyed practically 90 per cent of the coffee crop, and it not only 
destroyed the coffee trees then in existence, but it washed away the 
soil on the hillsides and left bare rock. At the same time there was 
overproduction of coffee in Brazil. The Americans changed the 
market. The free Spanish market was lost. Then the currency was 
changed. These were all disturbing conditions. Previous to the 
cyclone the people had raised the largest crop in the history of the 
island. They had used the money obtained from the high prices in 
educating their children abroad, and in extending their acreage—not 
to pay off their debts. And when the cyclone came they had no 
money and no means to obtain money by which they could restore 
their plantations. They are in that condition at this time, although, 
I am glad to say, the crop for the coming year promises to be a good 
one. 

The Chairman. Of coffee? 

Governor Winthrop. Of coffee; yes. 

The Chairman. Do you think the crop will be a good one? 


142 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Governor Winthrop. I think that the plantations which have been 
restored promise to yield a good crop the coming year. Blit there are 
a large number of plantations that have not been restored since the 
cyclone, so that the crop for the coming year will not be anything like 
as large as that of 1896. 3 

The Chairman. But, speaking generally, do you think that the 
coffee industry is being slowly rehabilitated ? 

Governor Winthrop. Speaking generally, it is better than it was 
last year, and it is better than it was the year before; but it is a very 
slow, a very, very slow process. I know that the people here are argu¬ 
ing that it is rather absurd to put a protective duty on coffee for the 
sake of a small number of Porto Ricans. A protective duty on coffee 
would not only assist the Porto Ricans, but it would also help the 
Philippines and Hawaii. Hawaii could produce 100,000,000 pounds 
of coffee. 

Mr. Larrinaga. May \ assist you in that? I have studied that 
matter, and I have been informed by planters from Hawaii that it 
would increase it three time over that figure. 

Governor Winthrop. I am very glad to know that. I took a very' 
conservative statement. In the Philippines some years ago the coffee 
output ranked as fourth, but now coffee is produced in very small 
quantities there. A-protective duty on coffee would restore that in¬ 
dustry in Porto Rico, the Philippines, and Hawaii. Each could 
produce a large amount. Mr. Larrinaga can tell me how much of 
the coffee consumed here could be produced, but I believe they could 

g roduce a very large percentage of the coffee consumed in the United 
tates. 

Mr. Hubbard. Is it not true that under the Spanish regime both 
the Philippine coffee and the Porto Rican coffee were given preferen¬ 
tial rights in the Spanish markets ? 

Mr. Larrinaga. Yes; and in the French markets, too. Spain had 
a treaty with those coffee-consuming countries in Europe so that they 
would allow Porto Rican coffee to come in at a very low tariff. And 
that made a very great impression on the Porto Rican people, because 
all those countries happened to be producing the same staples that 
Spain did. Spain allowed their staples to come in at a very low tariff 
into Porto Rico, so that they would admit Porto Rican coffee at a low 
tariff. The coffee for which we could get 8 or 10 cents a pound here 
we could get 80 or 35 cents for in France or Spain or Italy. When 
you ask for a very good cup of coffee in France the chances are that 
you get Porto Rican coffee. The Dingley tariff has so raised the 
duty on the Porto Rican coffee in foreign markets that it is imma¬ 
terial whether we send our coffee to New York or abroad. It sells 
very high there, but the money goes into their treasury, while we get 
no more profit from that than by bringing it to the American markets. 
It makes no difference whatever. 

The Chairman. Speaking generally, also, the sugar, tobacco, and 
fruit industries are becoming more and more prosperous, are they 
not? 

Governor Winthrop. Yes; they are. If we could secure assistance 
to our coffee the future of the island would be assured. Last year we 
exported 135,000 tons of sugar—the largest crop in the history of the 
island. And this year we will export, at a very conservative esti¬ 
mate, 20 per cent more than that amount. There was $2,600,000 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 143 

worth of tobacco exported last year, and this year the amount ex¬ 
ported will be fully 100 per cent greater, and the price has risen, I 
should say, 100 per cent, or has risen a great deal. 

The citrus-fruit industry is growing rapidly. We have not as yet 
made any great shipments of citrus fruit, because it takes five years 
for a tree to get its growth and bear fruit; but there are a great 
many Americans and Porto Ricans interested in citrus-fruit grow¬ 
ing. Next year we will made some small shipments, and the indus¬ 
try will then increase from year to year. 

We produce pineapples. There is a possibility of sea-island cot¬ 
ton being grown, and the government is at the present time intro¬ 
ducing a large number of sisal plants. That is a fiber plant similar 
in its purpose to the manila hemp, although it is not like manila hemp, 
and we hope to introduce it as another product. We are going to 
loan out the plants to private individuals, and receive from them 
an equal number of plants during the next'two or three years. 

The Chairman. There is another subject that I want to bring to 
your attention before we adjourn. It has been brought to my atten¬ 
tion very forcibly both in reading about Porto Rico and in conversa¬ 
tion with people from the island, and that is the anaemic condition of 
the laboring population. What is being done, or what can be done, 
to remedy this? 

Governor Winthrop. That is the most important work that we 
-have done there. Shortly after the cyclone, when General Davis 
was governor of the island, it was found that a number of people 
were in an anaemic condition. At first it was thought that this was 
caused by lack of food, but when they fed them well they discovered 
that such was not the case. Captain Ashford, an army surgeon, was 
in charge of the camp which was established, and it was found that 
the anaemic condition was due to a parasitic worm. Two years ago 
the insular government appropriated $5,000 to carry on this work. 

The Chairman. Does this parasite get into the blood? 

Governor Winthrop. It is an intestinal worm. Two years ago 
the insular government appropriated $5,000 for the expenses of a 
commission to study and treat this disease. This commission was 
composed of an army surgeon, a marine-hospital surgeon, and a 
Porto Rican surgeon of well-known ability. They studied the treat¬ 
ment of the disease, and at the same time cured 4,500 cases. Last 
year the legislature appropriated $15,000 for the work. The same 
commission carried on the work and has cured 22,500 patients. Next 
year we have an appropriation of $50,000, and I shall appoint three 
Porto Rican doctors—and eminent ones—who will establish substa¬ 
tions throughout the island. We are not only educating the people 
as to the curing of the disease, but we are also educating them how 
to prevent it. 

The people are learning rapidly, and they see the results of the 
cure. The cost is very slight, and the result is very great. A man 
who can not do any work, in two or three weeks after being cured 
can work and provide for his family. I believe that it is estimated 
that 90 per cent of the rural white population of the island are 
affected with uncinaria. I believe that if we can stamp out that dis¬ 
ease it will change the economic and social conditions of the country. 

Mr. Crumpacker. I suppose that the bulk or large majority of the 
people are very poor ? 


144 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Governor Winthrop. They are very poor, especially in the inte¬ 
rior, in the coffee regions. 

Mr. Crumpacker. Is there a sufficient number of physicians in the 
island to provide for the needs of all the people ? 

Governor Winthrop. There is in the towns, but there are a number 
of people living out in’ the rural districts far away from the towns, 
and it is very difficult to get medical attendance to them. 

Mr. Crumpacker. I imagined that was thp case. In view of the 
prevailing poverty and lack of money the field is not an inviting 
one to an ambitious young physician. 

Governor Winthrop. Not to one who has to support himself with 
his earnings. 

Mr. Crumpacker. What about sanitary conditions ? 

Governor Winthrop. They are improving rapidly. The people 
are exceedingly poor. Especially in the coffee regions they are very 
poor, and while the municipal doctors often can not reach them, they 
can very readily be reached by this commission that we are going to 
establish. We are going to establish camps in every small district, so 
that the people can come to them. 

The sanitary condition of the island -is improving. Of course it is 
rather a hard work, especially in the interior, but in the large cities 
it is superior to what it was a year or two ago. The city of San Juan 
is a very clean city. So are the other large cities of the island— 
Mayaguez, Humacao, Ponce, and others. Some are establishing 
sewer systems, and the greater number of the municipalities are 
doing all they can to improve their conditions. A great improve¬ 
ment is noticed generally in the administration of the municipalities 
in the last few years, and the officials are now doing their best to cut 
down expenses and at the same time to improve the conditions of the 
towns. 

Mr. Crumpacker. Do you have a law requiring the licensing of 
doctors ? 

Governor Winthrop. We have a medical examining board, and 
no doctor can practise medicine until he secures a license. 

Mr. Crumpacker. Is there any considerable amount of superstition 
connected with disease? 

Governor Winthrop. No ; I do not think there is. Mr. Larrinaga 
can probably tell you better about that than I can. I have been in 
the interior and talked with the people. They have been accustomed 
to taking medicine, and if you give them instructions as to taking it 
they will remember them perfectly, although they can not read or 
write. You give them instructions, and they will follow them out 
strictly. 

The Chairman. When one of the victims of the disease is cured 
and leaves the camp is he furnished with instructions to prevent its 
recurrence ? 

Governor Winthrop. Yes; he is given careful instructions. He 
can easily prevent its recurrence. He can prevent it by wearing 
something about his feet. Everyone of them is shown how this dis¬ 
ease is caused, and they are learning very rapidly. 

The Chairman. According to your statement, much of the so-called 
“ listlessness ” of the poor people is attributable to that disease. 

Governor Winthrop. Much of it is so attributable. When well, 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 145 

the native Porto Rican is on the whole an industrious man. When 
a man is sick he is naturally lazy. 

The Chairman. The cure will make him all over? 

Governor Winthrop. Make him all over, and it will change the 
social and economic conditions of the island. I have always heard 
that a Porto Rican is a better worker than a Cuban, and I know that 
he is far better than a Filipino. 

Mr. Larrinaga. The general rule for the workingman in Porto 
Rico was “ 6 to 6.” 

The Chairman. Twelve hours? 

Mr. Larrinaga. Twelve hours. Only an hour for breakfast. I 
have had those men working twelve hours in building bridges, foun¬ 
dations, throwing dirt from a 10-foot deep trench, and building 
foundations for bridges, and standing deep in the mud to their knees. 
I do not think that any workmen in any other part of the world 
could do any better. 

The Chairman. You have observed this anaemic condition, have 
you ? 

Mr. Larrinaga. I suppose that this has contributed to the listless¬ 
ness. 

Mr. Olmsted. Is there anything in the character of the soil or the 
climate that produces the disease? 

Governor Winthrop. No; it is a parasitic worm. It can be 
stamped out readily. The climate of Porto Rico, especially in winter, 
is excellent. It is delightful. There are only two hot months in the 
year—May and September. 

Mr. Crumpacker. How is the disease communicated? It is not 
contagious, is it? 

Governor Winthrop. No; it enters through the feet. It works 
its wav up to the intestines. 

Mr. Olmsted. Do they go barefoot ? 

Governor Winthrop. Yes. If they wore shoes the disease would 
not be communicated. 

Mr. Olmsted. It would be better to give them shoes instead of 
medicine. [Laughter.] 

Governor Winthrop. After they are cured that would be all right. 

The Chairman. Would a cheap sandal do for that ? The Japanese 
have a sandal they could buy for 2 cents a pair. Would they do for 
Porto Rico ? 

Governor Winthrop. Yes; if they were made to come a little way 
up. I think that a very cheap rope sandal could be made to be used 
by the people down there. 

The Chairman. What about the school system? 

Governor Winthrop. We have not got enough money to educate 
all the children. We are increasing the system steadily. We have 
1,104 schools now in operation, and an average attendance of 45,000. 
The total number enrolled is 68,000. We have more than doubled the 
number of schools in operation since 1898, and we have doubled the 
number of school children enrolled. We are building schoolhouses 
wherever we can, and especially in the rural districts. We are trying 
to extend the rural education. I am very anxious to give the greater 
masses an elementary education, rather than educate a few in the 
higher studies. The legislature assisted me very greatly last year 

35815—08-10 


146 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

in connection with the rural schools. The people seem to be very 
glad to learn. 

Mr. Rucker. Do you keep the races separate ? 

Governor Winthrop. No. 

The Chairman. What do you find about the children—what is their 
capacity ? 

Governor Winthrop. They are very eager and very anxious to 
learn. Most of the teachers are Porto Ricans. Of the 1,200 school¬ 
teachers only about 150 are Americans; the rest are Porto Ricans. 
The children are very bright, and very anxious to learn. I notice 
that the schools change the condition of the children. When they go 
back to school they are better dressed and cleaner. The parents take 
a pride in the learning of the children. 

Mr. Kinkaid. Is English being taught in all these district schools, 
as we call them, in the schools of the country ? 

Governor Winthrop. In the main schools, but not in the rural 
schools. In the main schools of the island we are teaching it. 

Mr. Kinkaid. They have native teachers in the rural districts who 
do not understand English, do they? 

Governor Winthrop. Not as a rule. Some of them understand 
English. Some of them have been in the United States, and know a 
little bit of English; but, as a rule, they are not capable of teaching 
English. In the larger cities and towns English is being taught. 

•Mr. Kinkaid. Are the native teachers who do not understand 
English ambitious to learn it? 

Governor Winthrop. Yes; very ambitious. They have teachers’ 
institutes, and they assemble at these institutes and try to get pointers 
on studying English. I think that the school system is doing a very 
great deal of good down there; but I wish that we had an additional 
amount of money with which we could enlarge it. 

The Chairman. Is the normal school successful ? 

Governor Winthrop. Very successful. 

The Chairman. What are the figures of attendance? 

Governor Winthrop. I can not give you the exact figures at once. 

The Chairman. You have only one normal school? 

Governor Winthrop. We have only one normal school. It is 
situated at Rio Piedras and is a part of the university. 

The Chairman. Can you approximate the number? Is it between 
one and two hundred ? 

Governor Winthrop. Yes; between one and two hundred. In the 
normal school proper there are 116 pupils, in the practice school 
176 pupils. 

Mr. Page. What salaries are paid the teachers in the public 
schools ? 

Governor Winthrop. The rural school-teachers are now paid $35 a 
month, and then the salaries go up from that point. The rural 
teachers were paid only $30 before, but the legislature has authorized 
an additional expenditure. 

Mr. Zenor. What percentage of school children are attending the 
public schools ? 

Governor Winthrop. It is rather difficult to tell. I should say 
about one-third are attending school. That is a rough estimate. If 
we had double the amount of money, I think that we could educate 
all the children. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 147 

Mr. Olmsted. Comparing the cost and standard of living with the 
cost of living in this country, what would you say $35 a month there 
would be the equivalent of in this country ? 

Governor Winthrop. I can not tell you. I suppose that would be 
about $60. Mr. Larrinaga, would you say that $35 a month to a rural 
school teacher in Porto Rico would mean $60 here? 

Mr. Larrinaga. More or less. 

Governor Winthrop. Somewhere about that, but I am not sure. 

The Chairman. Thirty-five dollars is not sufficient to induce teach¬ 
ers from the United States to go there, is it ? 

Governor Winthrop. No; we have to give them more—from sixty 
to seventy-five dollars. 

Mr. Hubbard. I suppose you think that it is the wiser policy, 
really, to encourage the Porto Ricans to enter these schools as school 
teachers. 

•Governor Winthrop. Yes. You mean down there. 

Mr. Hubbard. It is educational to the teachers as well as to the 
pupils. 

Governor Winthrop. Yes; I hope to educate the teachers, and then 
have the teachers educate the pupils. It is the better method. 

Mr. Gilbert. You spoke, a while ago, about a certain American 
judge having been elected unanimously. What population is in¬ 
cluded in that district? 

Governor Winthrop. I suppose, approximately, 60,000. 

Mr. Gilbert. Plow many votes were polled, approximately? 

Governor Winthrop. You are calling too much on my memory. I 
really do not know. 

Mr. Gilbert. I want to get at the percentage of the people who are 
exercising the right of voting down there. 

Governor Winthrop. I can tell you that, if you wish. The popula¬ 
tion of the island is about 1,000,000, and the votes cast 143,000. 

Mr. Gilbert. Why was there not a larger percentage of voters? 

Governor Winthrop. Is not that a large percentage? 

Mr. Page. That is a pretty good percentage. 

Mr. Gilbert. Have you any history of the United States in the 
common schools? 

Governor Winthrop. Yes. 

Mr. Gilbert. Is there any effort being made to teach the English 
language to the children ? 

Governor Winthrop. Yes; in the larger schools. 

Mr. Gilbert. The primary schools are restricted to Spanish en¬ 
tirely ? 

Governor Winthrop. In the rural schools, because we have not 
enough money to- 

Mr. Gilbert. Did I understand you to say that in the schools 
there is no discrimination of any kind shown between the races? 

Governor Winthrop. Yes. None whatever. 

Mr. Gilbert. And does that intermingling extend beyond the 
schools ? 

Governor Winthrop. Not in a social way; no. sir. I want to cor¬ 
rect what I have just said. They do so mingle. There is fortunately 
no race question down there. When I spoke I was thinking of the 
society in the larger capitals, where there is no mingling. Speak¬ 
ing generally, socially they do mingle together. 



148 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Gilbert. Do they mingle in the congregations in the churches? 

Governor Winthrop. Oh. yes; indeed. 

Mr. Gilbert. At picnics and gatherings, generally? 

Governor Winthrop. Picnics have not been introduced there. 
[Laughter.] 

The Chairman. Do you have clubs there? 

Governor Winthrop. In the cities; yes. Every city of any size has 
a casino. 

The Chairman. Porto Ricans and Americans are members ? 

Governor Winthrop. Yes, sir; in San Juan we have a number of 
clubs. We have a Union Club and a Country Club; and there is a' 
Spanish Casino; and Porto Ricans and Americans meet there in all 
the clubs. There is a very good feeling existing between the Porto 
Ricans and the Americans. In the early days, unfortunately, there 
was a class of Americans of the kind who always go to a new coun¬ 
try—a class of adventurers, who went to Porto Rico and abused the 
natives. The Porto Ricans are a generous, hospitable, and very kind- 
hearted people, and trusting. A certain class of Americans went 
down there and abused them, and took advantage of them; and there 
arose from that, very naturally, a feeling of disgust; but that is being 
rapidly overcome. They are beginning to discriminate now between 
the different classes of Americans, and I feel that their affection for 
the United States is increasing, and any feeling of antagonism to the 
United States never did exist. The so-called “ anti-Americanism ” is 
rapidly disappearing, as they learn to discriminate between different 
classes of Americans. 

Mr. Larrinaga. Was Judge Schoenrich the man who ran for the 
judgship at Mayaguez? 

Governor Winthrop. Yes. 

Mr. Larrinaga. Do you know what ticket he was on ? 

Governor Winthrop. He was put on every ticket. He did not 
choose a ticket. 

Mr. Larrinaga. He was on every ticket in the district. He did 
not care to choose. He asked me what he should do about it, and I 
said to him, “ Don’t you do anything.” He followed my advice, and 
came out all right. [Laughter.] 

Governor Winthrop. Last year the legislature authorized the 
issuance of bonds to the sum of $1,000,000 for the construction of 
roads and bridges, which were exceedingly necessary. I am anxious 
to have the same privileges accorded to those bonds that were ex¬ 
tended to the Philippine bonds, exempting them from taxation; and 
if that could be done it would assist us a great deal in placing these 
bonds upon the market. 

The Chairman. I think that there would be no contest over that 
in the House. In the bill which exempted the Philippine bonds from 
taxation an amendment was inserted to include the Porto Rican 
bonds, but it was stricken out, the idea being not to mingle the two 
in the same act. I think that there would be no objection to it. I 
should have none. 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 149 


Appendix A. 

Executive House, Porto Rico. 

San Juan , January 29, 1906. 

Hon. Henry A. Cooper, * 

House of Representatives , Washington, D. C. 

My Dear Mr. Cooper : The New York Sun of January 20 reports that Mayor 
Todd, of San Juan, in a hearing before the Committee on Insular Affairs, 
criticised severely the manner in which the government of Porto Rico is being 
conducted. The article states that he declared that the six members of the 
executive council from the United States “ not only control the executive council, 
but absolutely exclude the native members from participation in the affairs of 
the government.” “ The natives are regarded,” he is reported to have said, 
“ as mere figureheads, and have nothing whatsoever to do with the affairs of 
the office to which they are appointed.” He also declared, I understand, that 
the native members of the council are not asked to attend the informal meetings 
which the governor sometimes holds with the heads of the different depart¬ 
ments. I have seen a letter from Mayor Todd which substantially confirms the 
accuracy of the above report. 

I do not desire to discuss the form of government that should be adopted for 
Porto Rico. That is a matter which pertains entirely to the Congress and 
President of the United States, but I do object most seriously to such state¬ 
ments as Mayor Todd is reported to have made, to the effect that the Porto 
Ricans are not consulted in the administration of the government. Upon read¬ 
ing the article I wrote a letter to each of the four Porto Rican members of the 
executive council at the present time on the island, asking them their opinion 
upon the remarks reported to have been made by Mayor Todd. The fifth Porto 
Rican member of the executive council is at present in the United States, but 
I shall get him to express his views as soon as he arrives in Porto Rico. I beg 
to inclose a copy of each of the letters received, and also a copy of a letter 
received from Mr. De Diego, which was entirely unsolicited by me. Mr. De 
Diego was formerly a member of the executive council, having resigned his posi¬ 
tion about five years ago. He is at the present time a member of the lower 
house, and the leader of the majority party. You will see from these letters that 
the reported statements of Mr. 'Todd are absolutely false. The direct state¬ 
ments from the Porto Rican members of the executive council themselves would 
certainly seem to have more weight than the irresponsible opinions expressed by 
Mr. Todd, or the somewhat tardy objections of two former members of the 
council who failed to secure reappointment when their terms expired some 
years ago. ' . 

The journal of the executive council during the last session of the legislature 
also refutes the reported statements. During this session the council was called 
upon to vote 121 time on various bills. In 102 cases the votes were unanimous. 
In 56 of these 102 cases the Porto Rican members present and voting either out¬ 
numbered or equaled the Americans present and voting. In not a single instance 
since I have been on the island—now nearly nineteen months—has there been a 
division of voting on the line of Americans against Porto Ricans. In other 
words, in every instance on which there was the slightest difference of opinion 
in. the executive council the measure was carried or defeated by the combined 
vote of Porto Ricans and Americans. Of the 19 cases where there was a division 
of votes during the last session in 13 the Porto Ricans present and voting were 
either equal to or greater than the Americans in number, and in 14 instances out 
of 19 the measure was carried in accordance with the will of the majority of 
the Porto Ricans voting. The other 5 instances were cases where measures 
brought up from the lower house were adopted. In not a single instance was a 
proposed measure defeated in the executive council, except where the majority of 
the Porto Rican members of the executive council desired that it should be so 
defeated, and of course not a legislative measure has been carried, except with 
the concurrence of the lower house, composed entirely of Porto Ricans. These 
statistics from the official record show how false Mr. Todd’s remarks are, to 
the effect that the Porto Rican members are excluded from participation in 
governmental affairs. The executive council has never in its history met with¬ 
out the presence of Porto Rican members. 

As to the statement that the Porto Rican members are never invited to attend 
the informal meetings of the governor with the heads of the departments, Mr. 
Todd’s reported statement is absolutely misleading, and, indeed, false. It is 


150 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


true that those members who have merely legislative functions do not attend 
these meetings, as the meetings are solely with reference to matters pertaining 
to departmental and interdepartmental administration. There is no more rea¬ 
son for the attendance of the members of the council, whose sole duty is legis¬ 
lative, than for the presence of the members of the lower house of delegates. 
The executive council is not the governor’s council, it never meets in the 
presence of the governor except in joint session with the lower house on the 
opening day of the legislature, when the governor reads his message. Its func¬ 
tions are carefully separated from those of the governor by the organic act, 
and were the la.ter to request that its sessions be held in his presence he 
would be justly charged with improperly attempting to influence its actions. 
The heads of the departments' it is true, are members of the executive council, 
but they are called in consultation by the governor, not because they are mem¬ 
bers of such council, but because they exercise the duties of heads of depart¬ 
ments. imposed upon them by sections 18 to 25 of the organic act. 

Furthermore, in view of the fact that the legislative assembly of Porto Rico 
created a new department, at the head of which was appointed Mr. Andres 
Crosas, a Porto Rican member of the council, Mr. Crosas is Always invited and 
regularly attends the meetings of the governor with the heads of the different 
departments, and I may say renders excellent advice. It is the same as if 
the members of the President’s Cabinet had votes in the Senate. In such a 
case the President probably would not call other Senators, whose functions are 
purely legislative, to attend Cabinet meetings held solely with reference to 
administrative duties. These meetings are purely informal talks, and no formal 
action is ever taken. In matters of legislation, in questions of appointment, 
and in all other matters the Porto Rican members are always consulted. I do 
not remember a single instance of an appointment being made by- the governor 
without previous consultation with Porto Ricans of standing. 

I should be glad if you will have forwarded to me a copy of the testimony of 
Mayor Todd when it is printed, if this request is not inconsistent with the rules 
of your committee. 

As I said before, I do not feel that it is my place at this time to discuss any 
proposed legislation by Congress with reference to the government of the island; 
but I do most emphatically object to the false statements as to the conduct of 
the American members of the executive council reported to have been made by 
Mayor Todd in his endeavors to secure a reform of the organic act. The rela¬ 
tions of the members of the executive council to each other and to the governor 
is the one point above all in which the government is free from just criticism. 

Believe me, sincerely, yours, 


Beekman Winthrop. 


I have shown this letter to all the Porto Rican members of the executive coun¬ 
cil, and they have expressed their entire accordance with the statements and 
views that it o^-'Puns. 


Agree: 



(Signed) 

Josic C. Barbosa. 

Agree: 


(Signed) 

Andreas Crosas. 

Agree: 


(Signed) 

R. del Valle. 

Agree: 

\ 



(Signed) 

Herminio Diaz. 


[Translation.] 


Hon. Beekman Winthrop, 

Governor of Porto Rico. 


House of Delegates, Porto Rico, 

San Juan, P. R., January 26, 1906. 


Sir : The fact that certain complaints have been presented to the Government 
of the United States relative to the conduct of the American officials connected 
with our insular government has come to my knowledge. 

It appears to be the intention to spread in the United States the belief that 
the Porto Ricans are not given any attention in legislative matters nor in mat¬ 
ters concerning the administration. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 151 


I know not on what such versions may be based. The house of delegates is 
under no pressure from the government, and our good laws are accepted by the 
executive council. You, as governor of Porto Rico, have never made use of the 
right to veto, and our chamber of delegates is thoroughly satisfied. 

Our claims in matters coming under the executive power are always consid¬ 
ered, aud very often favorably resolved. 

We demand the reform of the executive council as a legislative body for doc¬ 
trinal reasons, without personally attacking any actual members of that body. 

Kindly excuse me if I commit any indiscretion in addressing you this letter, 
but I do not wish to be confounded with those who in such manner falsely repre¬ 
sent the situation in Porto Rico. 

Respectfully, Jose de Diego. 


San Juan, P. R., January 27, 1906. 

Hon. Beekman Winthrop, 

Governor of Porto Rico, San Juan, P. R. 

My Dear Mr. Winthrop : In answer to your letter of to-day, I take pleasure 
in saying that during the time I have belonged to the executive council as a 
member of the same, and that has been for a year already, participation has 
been given me in all the matters brought before said body. I have discussed 
them with freedom, and I have voted them in accordance with my conscience. 

Had I noticed any lack of consideration on the part of the government, or on 
the part of the Americans who are members of the executive council, I would 
have discontinued my attendance to that body. 

Very sincerely, yours, R. del Valle. 


Executive Council. Porto Rico, 

San Juan, P. R., January 29, 1906. 

Hon. Beekman Winthrop. 

Governor of Porto Rico , San Juan, P. R. 

My Dear Governor: Replying to your favor of the 27th instant, I must state, 
unqualifiedly, that ever since 1 have had the honor of being a member of the 
executive council I have always been consulted, the same as the other Porto 
Rican members, in all matters brought before that body. 

I may add, furthermore, that I feel proud of the consideration which has 
always been shown me by the American members, who always solicit my opinion 
and support on all matters brought before us for consideration. 

I am not a man who would have been satisfied with being a mere figurehead in 
that body. If such were the case my resignation would not have been delayed. 
Very sincerely, yours, 

Herminio Diaz. 


Executive Council, Porto Rico, 

San Juan, P. R., January 28, 1906. 

Hon. Beekman Winthrop, 

Governor of Porto Rico, San Juan, P, R. . 

My Dear Mr. Winthrop : In reference to your favor of yesterday’s date, I 
hasten to inform you that I have been truly surprised at the statements made 
by Mayor Todd to the Committee on Insular Affairs of the House of Represen¬ 
tatives referring to the executive council of Porto Rico and published in the 
New York Sun of Saturday, January 20, and which are couched in the following 
terms: 

“ The remaining six * * * of the United States * * * absolutely 

exclude the native members from any participation whatever in government 
affairs. The natives are considered as mere figureheads and have absolutely 
nothing to do with the affairs of the office to which they have been appointed.” 

I must frankly confess that during the period of nearly six years that I have 
been in the discharge of the duties of the high office of member of the executive 
council of Porto Rico I have on no occasion observed a single act of partiality 
on the part of the government in favor of the councilors born in the United 
States, who, like the natives of Porto Rico, enjoy all the liberty of action 
inherent to their high office, and I therefore do not think that any member of 
the executive council can say, without being wanting in decorum, that the 





152 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


representation of such a high office before the people and the government is 
that of a mere figurehead. 

With respect to myself. I must honestly state that as a member of the execu¬ 
tive council I have had the satisfaction of being consulted always—as much 
by yourself as by all my colleagues of the council—in all matters on which my 
reports have been necessary, and I have merited the special distinction from you 
of being asked my opinion on certain occasions concerning matters of general 
interest and of great importance to the government. 

In the month of January, 1905, I received from you the honor of being ap¬ 
pointed director of the department of health, charities, and correction, in the 
discharge of the duties of which position I have acted with absolute inde¬ 
pendence, hawing under my control the absolute administration of this depart¬ 
ment, and under no circumstances have either you or any member of the govern¬ 
ment sought to exercise pressure or bring authority to bear in matters coming 
solely under my responsibility in the discharge of the duties of my office, and 
in like manner I must state that from the above-mentioned date on which I 
assumed control of the consolidated department I have taken part in all the 
\ cabinet meetings which you have held with other heads of departments, and I 
should not omit to state that on no occasion has the cabinet met without my 
being present. 

I take pleasure, Mr. Winthrop, in sincerely making these statements which 
may serve on any occasion to annul Mayor Todd’s statements, which, besides 
being groundless, are, in my opinion, inexplicable. 

I have the honor to be, very respectfully, yours, 

Andres Crosas, 

Member Executive Council, 
Director of Health, Charities, and Correction. 


Executive Council, Porto Rico, 

San Juan, January 29, 1906. 

Hon. Beekman Winthrop, 

Governor of Porto Rico, San Juan , P. R. 

My Dear Governor: In reply to your letter of the 27th instant, concerning 
certain statements reported in the New York Sun as having been made by Mayor 
Todd before the Committee on Insular Affairs of the House of Representatives, 
in which you ask my opinion “ as to whether I feel that I have been absolutely 
excluded from participation in the affairs of the government, or that I have 
nothing whatsoever to do with the affairs of the office to which I was appointed,” 
I beg to state, most clearly, that during the six years that I have been a member 
of the executive council I have taken part in all affairs of the government 
brought before the executive council for consideration. Furthermore, I have been 
given every opportunity to defend my views, debating them fully and freely, and 
have cast my vote conscientiously and with entire independence; that, not only 
in my official capacity as a member of the executive council, but also in a per¬ 
sonal way, I have always received the most courteous treatment from each and 
every member of the administration, and I am satisfied that my official position 
has afforded me the opportunity to work in the advancement' of the political, 
economical, and social conditions of my country. 

Had I felt at any time excluded in any manner from participation in the 
affairs of the executive council, of wTiich I am a member, you may believe, Mr 
Governor, that I wmuld have tendered my resignation rather than be regarded 
as a mere figurehead. 

Very sincerely, yours, j 0SE C. Barbosa. 


Hon. Beekman Winthrop, 


Executive Council, Porto Rico, 

San Juan, P. R., February 8, 1906. 


Governor of Porto Rico , San Juan, P. R. 


My Dear Governor : With reference to the conversation we had the other day, 
during the course of wdiich you showed me a copy of your letter to the Hon’ 
Henry A. Cooper, under date of January 29, I consider it only just to express 
to you my approval of the contents of said letter, agreeing with the opinion of 
the other native members of the executive council. 

Yours, very sincerely, 


L. Sanches Morales. 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 153 


Executive Council, Porto Rico, 

San Juan, P. R., February 3, 1906. 

Hon. Beekman Winthrop, 

Governor of Porto Rico, San Juan, P. R. 

My Dear Governor : I have just received your communication of yesterday 
asking me whether I feel that I have been excluded from participation in such 
governmental affairs as come under the province of the executive council of 
Porto Rico. 

In answer to your question, I take pleasure in stating that I am thoroughly 
satisfied that I have always enjoyed every right and privilege belonging to 
me as a member of the executive council, where my opinions have been on all 
occasions freely expressed and duly considered, and my vote has always had 
the same force and value as any other vote cast therein. 

I would certainly not have kept or even accepted any position in which I 
might be considered a figurehead! 

Very sincerely, yours, L. Sanches Morales. 










- i /« 


# 


PURCHASE OF COAL LANDS IN THE PHILIPPINE 
ISLANDS. 


Committee on Insular Affairs, 

House of Representatives, 

January 1906. 

STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

The Chairman. Mr. Secretary, the committee desires to take up 
House bill No. 12864, entitled “A bill to provide for the purchase of 
certain coal lands in the Philippine Islands, and to authorize the lease 
of same and of the Batan Military Reservation, for the purpose of 
securing a local coal supply to the United States Government in the 
Philippine Islands.” The committee will be glad to hear you on this 
bill. 

Secretary Taft. This bill, gentlemen, relates to the coal measures 
that are on the island of Batan, which is just here [indicating on the 
map], forming a part of the outside of the Gulf of Albay, in the south¬ 
eastern part of Luzon. It is off the “boot” of Luzon, so to speak. 
It comes awa}^ down here [indicating on the map]. When General 
Davis was the military commander of the Division of the Philippines 
and I was the civil governor, we became interested in the question of 
the supply of coal in the islands. 

It is a very considerable item of expenditure, both for the army and 
the navy as well as for the civil government. There is no good coal 
in the Orient, unless it be in China. I mean no coal that is to be com¬ 
pared with our Pocahontas coal. The Japanese coal is largely low- 
grade bituminous, and the same is true of the Australian coal. I think 
that Australian coal is used more in the Philippines than is Japanese. 
However, Lieutenant Wigmore can correct me as to that. 

In the Philippines there are coal measures in various places. There 
is an old coal mine in Cebu. I say “old.” It has been worked for 
some time. There is some coal near Manila which it is hoped can at 
sOme time be used in connection with some very fine iron deposits at 
Angat. In order to do this it will be necessary to run a railway to 
the source of supply. There is some coal in Bangat, and coal deposits 
are also found at some other places. 

The most satisfactory coal field that we have found thus far, how¬ 
ever, is in this little island of Batan. You will observe that this island 
is only a few miles—perhaps 50 miles—off the regular line of travel 
154 



HEARING BEFORE HOUSE COMMITTEE ON INSUUAR AFFAIRS. 155 

which the steamers follow in entering* the archipelago from Guam, 
and on the regular line from San Francisco. The vessels come through 
the San Bernardino Straits, and then go down here between Masbate 
and Ticao [indicating on map], through these straits to Manila. The 
island of Batan has one of the best harbors in the Philippines. The 
water is deep, and the harbor ground is good. Harbors in the Philip¬ 
pines are by no means too numerous. There are coal claims which 
have been located and perfected by Spaniards according to their mining 
law, which cover all the mining land directly accessible from this 
harbor. As soon as we learned that the island was useful for the pro¬ 
duction of coal, we reserved for the Government all the western half 
of it that , had not already been located. On investigation it turned 
out that the two or three Spaniards who had these valid claims under 
the Spanish mining law, had taken up all the claims which lay imme¬ 
diately along the harbor, and had pushed back, so to speak, the Gov¬ 
ernment ownership be}^ond the line of hills or mountains, and made 
impossible access to the harbor from the claims which the Government 
could establish or reserve, and the only way of reaching those other 
veins of coal on the island was around by sea. 

In other words a right of way would be impracticable. At the 
instance of General Davis, and upon my recommendation, the Secre¬ 
tary of War authorized out of the transportation fund of the army 
transportation—I think that was the fund—an investigation by Lieu¬ 
tenant Wigmore, with diamond drills and all the paraphernalia neces¬ 
sary for determining the location of the .coal fields, its character, the 
thickness of the veins, and all general information which a person 
would desire who was about to invest in a mining speculation. 
Lieutenant Wigmore spent three years, I think, or nearly so, possibly 
about two years, in this work, and he has made a report of his inves¬ 
tigations. At my suggestion—certainly with my concurrence—Gen¬ 
eral Davis secured from the owners of these mining claims an option 
for their purchase at $50,000. That option expired June 11 last, and 
was extended until March of this year. 

The character of the coal is better than any of the coal that we get 
in the Orient. It is consumed somewhat quickly, but leaves very little 
ash and cinder. It has more carbon, as Lieutenant Wigmore reports, 
than any other coal in the Orient, and is properly to be classed, as I 
understand it, as bituminous coal rather than lignite. If we had found 
no claim there, we should certainly have reserved it for the Govern¬ 
ment use, because, according to Lieutenant Wigmore’s examination, 
investigation, and report, we can secure coal from there that now costs 
us from four to five dollars a ton, and sometimes six dollars a ton, for 
from two to two and one-half dollars per ton. The plan is that we shall 
buy these claims for the Government and thus have direct access to the 
harbor, so situated that any of our transports could move in there easily 
and be loaded, coming close to the shore, and that we should lease these 
lands to some capitalist who would put in a mining plant, and with the 
assurance of Government patronage would be willing to make the neces¬ 
sary investment in order to produce the coal properly. 

This investment would be upward of a million or a million two hun¬ 
dred thousand dollars. We might lease it for twenty-five years, with 
the privilege of taking coal at two dollars or two dollars and a half a 
ton from the operators. And, then, with that basis of patronage 


156 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

they could go ahead and export coal to the islands. Indeed, we think 
that they might export coal to Hongkong and Japan even, because of 
the superior quality of the coal. Mr. Littauer, of the sub-Committee 
on Appropriations, objected to this appropriation, because he did ndt 
see that ownership by the Government would be an aid to our getting 
the coal. He thought that it would be an obstruction, and that if this 
was worth only fifty thousand dollars capitalists would certainly put 
in fifty thousand dollars if they were willing subsequently to invest a 
million or a million two hundred thousand dollars, and that the inter¬ 
vention of the Government would be only an obstruction. 

At first thought there seems to be some ground for this vie’#. I 
have confidence in this proposed plan, because I have spoken with a 
gentleman who is anxious to go in and make an arrangement with the 
Government. If the arrangement is made there would be three cus¬ 
tomers whose demand for coal would be more or less constant, namely, 
the Army, the Navy, and the civil government. The question has 
arisen as to whether or not the Navy would use this coal. The Navy 
generally uses Pocahontas or some English steaming coal, and possibly 
the Navy would use this. I do not know as to this, but certainly they 
could count on the Army’s using it for its transports, and also certainly 
upon the civil government. This would furnish them with quite a 
basis for doing business, and that is the reason why they would like 
the Government to get in and appear before them as the lessor of these 
lands for twenty-five years, with an arrangement to sell coal to the * 
Government at a fixed price, or at the actual cost price, plus 10 per 
cent for profit. I think that it is an important opportunity. It is 
very unfortunate that these Spaniards have secured the local claims. 
As long as they remain in the hands of the Spaniards we can be prac¬ 
tically certain that this very valuable coal measure, as we think it to 
be, will be undeveloped. 

American capital is very slow to go into the Philippines. There are 
so many opportunities here in the United States for investments 
at a profit now, in these good times, that it is very hapd to induce 
Americans to put their capital in investments 7,000 miles away 
from our western shores. Spaniards have practically no capital, and 
what they do is to sit down and wait. We should like to have some¬ 
body besides waiters out there. I have now an offer from a son of 
Mr. Scott, who is a son of one of the Scotts of the Union Iron 
W orks- 

The Chairman. Of San Francisco? 

Secretary Taft. Yes, sir. He has made an offer that if he finds the 
measures to be what Lieutenant Wigmore reports them to be, they 
desire to lease on terms like those I have described, namely, at twenty- 
five years, and agreeing to put in a plant at an expenditure of about 
$1,000,000, I think—something of that sort—an adequate plant for 
mining the coal. Of course, I need not say to this committee that 
mining is always a speculative matter, and the proposed investment of 
$50,000 by the Government might not prove to be as fortunate as we 
think it would be. We have had a competent man there, a member of 
the Corps of Engineers of the United States Army (who has been up 
to Japan to investigate mining) for the purpose of ascertaining the 
value of the coal lands in the island of Batan, and his judgment is that 
the property is well worth the price that we have agreed to pay for 
it; and I feel confident that if we do not accept this option now, were 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 157 

we to get into the deal later we would likely have to pav more for 
the lands or coal. 

Mr. Crumpacker. I suppose vou have no doubt of the validity of 
the claim of the Spaniards? 

Secretary Taft. No, sir; because we had at the head of our mining 
bureau in the Philippines a Captain Burritt, who came from Montana, 
and who is a lawyer and a man who has had great experience in mining 
law in that State. He devoted three or four years to this work. I 
since appointed him to the bench in the mining regions because of his 
familiarity with the mining laws and his examination of the claims. 
Of course there are in the islands a great many unfounded mining 
claims, but we examined the ones in question with great care, because 
if we could have declared them invalid, and if we had found that the 
present claimants could have justly been dispossessed, we should cer¬ 
tainly have done so. 

Mr. Crumpacker. How extensive is this coal measure, Lieutenant 
Wigmore? 

Lieutenant W igmore. The measures cover several thousand acres. 

Mr. Crumpacker. The quantity is very large? 

Secretary Taft. Very large. The estimate of Lieutenant Wigmore 
shows that it is sufficient to last two hundred years. 

Lieutenant Wigmore. Yes, sir; the veins run from 2 to 13 feet in 
thickness. 

Mr. Crumpacker. So that there is no danger of a coal company 
going in under this bill and leasing the measure and exhausting the 
supply ? 

Secretary Taft. No, sir; I do not think that would be possible. Is 
that not true, Lieutenant? 

Lieutenant Wigmore. I hardly think that they would exhaust the 
supply in these claims alone if we leased them for not more than fifty 
years. 

Mr. Crumpacker. You do not think it is practicable for the Gov¬ 
ernment to install a mining outfit? 

Secretary Taft. We offered to the civil government—I say “ we,” 
meaning the War Department, because these claims were reserved to 
the United States through the War Department—we offered to the 
civil government an opportunity to take these off our hands and operate 
the mines; but the Commission felt—and I think properly so—that 
they ought not to go into the business of mining. They had enough 
problems to solve, and enough difficulties to meet, to avoid this one, 
and I am anxious that the Government itself shall not go into the busi¬ 
ness of mining. It would involve us in a speculation of certainly a 
half million and probably a million dollars. This expenditure of 
$50,000 is moderate in view of the possible and probable profits that 
would result from it. 

Mr. Crumpacker. How much do we spend for coal ? 

The Chairman. What would be the approximate saving in the Gov¬ 
ernment expenditure by the purchase of these mines and the perfecting 
of these leases, selling the coal at $2 to $2.50 per ton? 

Secretary Taft. My impression is that, including the coal for the 
Army and Navy, it would be upward of five hundred thousand or a 
million dollars. 

Lieutenant Wigmore. It would save $400,000 to $500,000 a year. 


158 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Secretary Taft. The difference between two and two dollars and 
a half a ton, and four and five dollars a ton. 

Mr. Webber. Is coal being mined in these parts now? 

Secretary Taft. No, sir; we took out two or three hundred tons by 
way of experiment, but the mine is not being used now. 

Colonel Edwards. It has been used in former times? 

Lieutenant Wigmore. The Spaniards used it in former years to some 
extent. They took out coal for commercial purposes, selling it at $7.50 
per ton. 

Mr. Olmsted. Do I understand you to say that the acreage covered 
by the claims of these two gentlemen is about three hundred? 

Lieutenant Wigmore. Yes, sir; it takes in th$ whole water front. 
That is, it covers all the land about the harbor. 

Mr. Olmsted. It commands the harbor entirely? 

Lieutenant Wigmore. Yes, sir; it takes it in entirely. 

Mr. Crumpacker. Has that harbor been improved? 

Secretary Taft. No, sir; but it is one of the best harbors in the 
islands. There is 17 fathoms of water in the main bottom. 

Mr. McKinlay. How close can vessels get to shore? 

Lieutenent Wigmore. Within 100 yards, drawing 32 feet of water. 

Mr. Crumpacker. Is that island a military reserve? 

Secretar}^ Taft. Only the few claims that we were able to reserve. 
Just as soon as we learned that coal was there we reserved all there 
was. 

Mr. Olmsted. According to the proposition in question we would 
pay $166f. That would be a pretty good price in Pennsylvania for 
untouched coal land without any openings or improvements; but I 
assume that it would be worth more down there than in Pennsylvania 
on account of the higher price of coal. 

Mr. Webber. It is a question of how we can get it. 

Secretary Taft. I do not want to prophecy a certainty about this, 
but I only want to say that, in my judgment, so far as" I have been 
able to investigate the matter, this investment of $50,000 is worth 
while. It may turn out to be a failure, but I think not. The value 
of what we will get, if our judgment is correct, is so much greater 
than $50,000 that I think the Government would be justified in making 
the expenditure. 

Mr. Olmsted. Do you think that private parties would be more 
likely to open the land, make the necessary improvements, and operate 
the mines than the Government would bo if they owned it themselves, 
or if they leased it from the gentlemen themselves? 

Secretary Taft. Yes, sir. I am quite sure about that. That is the 
point that Mr. Littauer made. 

The Chairman. Is Lieutenant Wigmore here? 

Secretary Taft. Yes, sir; he is here, and 1 will be very glad to 
yield to him, if I may. He has made a report, which has been printed, 
and I think we have sufficient copies of it to give one to each member 
of the committee. 

Mr. Olmsted. Have you any estimate of the number of acres of 
coal land of which the Government now has control, outside of the 
land lying back of these private lands? 

Secretary Taft. Lieutenant Wigmore has that. I believe that I 
ought to say that there are some coal measures up in Polillo, an island 
up here [indicating on map], but that is considerably off the line of 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 159 

travel, and it is on quite forbidding coasts. Ordinarily the Pacific 
coast of the islands along the Orient have neither good harbors nor 
good roadsteads. It is a veiy rugged and precipitous coast. 

Mr. Olmsted. The difference in the accessibility of the harbor 
would soon make a difference of more than $50,000 in the availability 
of coal. 

STATEMENT OF LIEUT. H. L. WIGMORE, C. E. 

The Chairman. Are you in the Regular Army? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. To what regiment do you belong? 

Lieutenant Wigmore. Corps of Engineers. 

The Chairman. How long have you been in the Philippines? 

Lieutenant Wigmore. Four and one-half years. 

The Chairman. You were appointed by the Philippine government 
or by the War Department, to make an investigation of the coal fields 
on the Island of Batan? 

Lieutenant Wigmore. I was detailed by the War Department. 

The Chairman. When did you enter on the discharge of that duty? 

Lieutenant Wigmore. July 3, 1903. 

The Chairman. How long did you continue that investigation? 

Lieutenant Wigmore. I stayed there until the early part of May, 
1905, investigating those fields. 

The Chairman. Practically two years. 

Lieutenant Wigmore. Yes, sir. 

The Chairman. Now, will you please relate to the committee what 
you did and what you know about the Spanish claims, etc. 

Lieutenant Wigmore. I was sent down to the island of Batan with 
the understanding that these seams all had been investigated, and that 
there was nothing to do there but open up these seams. After three 
months’ work I found that it was an entirely different proposition 
from what I had supposed it would be. The strata was not known, 
and we found upon further investigation that it would probably be 
profitless to continue investigation by entry work. I knew nothing 
of the character of the coal or how it ran. 

I made a recommendation to the Government that we cease all other 
work and take up drilling exclusively, and asked for a further allot¬ 
ment of money, which was granted. From then (October, 1903) I 
have been drilling over the property covered by the claims, because I 
found from the outcroppings, which were 5 miles long, that any 
results found on these claims as to the coal underlying them would 
probably be conclusive as an indication of what we had in the rest of 
the reservation. 

The Chairman. What is the size of the harbor of Batan? 

Lieutenant W igmore. The harbor will take a small fleet. I do not 
know its acreage, but it is nearly three-fourths the size of the harbor 
within the Manila breakwater. There are two harbors—one large 
and one small one—where a fleet could rest. 

With these diamond drills I found that the coal measures were two 
in number, separated by a thick strata of limestone, and that in the 
upper set of measures there was probably from six to ten feet of coal, 
and in the lower set.from twenty to twenty-five feet, as revealed by 
the drill holes. The continuity of these seams has not been developed. 


160 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Our drills were not sufficiently powerful to go any further down than 
300 feet. The continuity in the direction of the strike was ver}^ well 
proven by the outcrops which we traced from the shore to the reserva¬ 
tion boundary line which crosses the island and will be shown in the 
first map in the pamphlet. That sums up, practically, what we were 
doing there for a year and a half. 

The Chairman. What did you find as to the character of the coal? 

Lieutenant Wigmore. We found that the coal is abundant in quan¬ 
tity. and in character, 50 to 54 per cent carbon, 39 to 42 per cent vola¬ 
tile matter, 5 per cent moisture, 2 to 4 per cent ash, one-half of 1 per 
cent sulphur, corresponding in carbon to what, the Australian coal 
carries, but it differs in the ash and sulphur, carrying only from 2 to 4 
per cent of ash, and one-half of 1 per cent of sulphur. The coal is very 
clean, and this constitutes the great difference between it and other coal 
in the Orient. Japanese coal is very dirty, and carries 2£ per cent of 
sulphur and a large percentage of ash. The Australian coal is similar 
to the analysis I have just given of our own coal. 

The Chairman. You found this better than any other coal in the 
Orient? 

Lieutenant Wigmore. Better than anything else in the Philippines. 
I mined 400 tons of it in order to get out sufficient for our transports, 
and I tried to make a practical test of it, because a report of engineers 
in such cases is always the thing that is most satisfactory, despite 
what the analysis may give. If the engineers are satisfied with the 
coal it means that the coal is good and will sell. The engineers of the 
island transports were very well satisfied with the coal and reported 
it better than any they had used. 

The Chairman. Did you find in your investigations that it ran uni¬ 
form in quality? 

Lieutenant Wigmore. Quite uniform in quality, but not in the 
thickness of the seams. The seams vary in thickness. I believe that 
an outcrop of 65 degrees dip at the top will flatten out to about 15 
degrees when we get down to two or three hundred feet below the 
sea level. 

The Chairman. What is the size of the island of Batan? What is 
its length and width ? 

Lieutenant Wigmore. It is about 10 by 5 miles. 

The Chairman. In your judgment, about how much of the island 
will yield coal in pa 3 7 ing quantities? 

Lieutenant Wigmore. I think that the entire island is underlaid 
with coal. The seams run from the western end to the eastern end. 
They run across the island diagonally. 1 therefore figure that in our 
acreage, which is about 25 square miles, probably about one-half, or 
approximately 12 square miles, is underlaid by these coal beds; but 
this does not mean that we have all that acreage which is suitable for 
coal mining, because it may go down so deep that it can not be 
extracted profitably. But, we do think from the results of our drill¬ 
holes that anything from fifty to one hundred years’ supply is in that 
area from 500 feet above to 300 feet below the sea level. If we can 
presume that these seams continue farther down, we can increase that 
estimate to two hundred years, reckoning our estimate of production 
at about 200,000 tons a year. 

The Chairman. Did you make any estimate as to the cost of minino* 
the coal there? 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 161 

Lieutenant Wigmore. It cost me when I was working there, doing, 
of course, the most expensive kind of mining—that is to say, entry 
work solely about $2 a ton, but that cost should be materially reduced. 

The Chairman. You mean with a larger and better equipped plant? 

Lieutenant Wigmore. With a larger and better equipped plant. 
Then I was just going into the outcrop by means of entries. I was, 
of course, taking out coal by entry work, which required continuous 
timbering. 

The Chairman. You took out the coal and collected it at a cost of 
from $1.50 to $2 a ton. 

Lieutenant Wigmore. Yes, sir. I do not think that the cost would 
eventually be over one dollar and a half per ton. Japanese coal costs 
$1.33 per ton and Australian $1.70, while that of the United States 
costs only $1.09. 

The Chairman. What would be the average saving per ton to the 
Philippine government or to the United States Government at that 
rate ? 

Lieutenant Wigmore. On board ship at the harbor the average 
saving over what we are paying for coal now would be from two 
dollars and a half to three dollars per ton. 

Secretary Taft. What would be the difference laid down at Manila ? 

Lieutenant Wigmore. Probably $2, or $1.50 at least, laid down at 
Manila. Most of our transports can go in there and get it right at 
the wharf. 

The Chairman. You said something a few moments ago about the 
depth of water—about ships drawing 32 feet of water. How near can 
they go the wharf? 

Lieutenant Wigmore. About 100 yards from the shore line. 

Mr. McKinlay. Is that a quiet bay and landlocked ? 

Lieutenant Wigmore. It is very quiet. It is absolutely landlocked, 
so that a vessel could load at any time. 

Mr. McKinlay. Day or night? 

Lieutenant Wigmore. Yes, sir; day or night. 

Mr. McKinlay. And it is only about 50 miles from the line of the 
beaten track of vessels. 

The Chairman. Colonel Edwards suggests that some of our vessels 
coal in Japan. At what place do they coal? 

Lieutenant Wigmore. At Nagasaki. 

The Chairman. If we had those coal fields in Batan, could our ves¬ 
sels go there and coal so that they would not need to go to Japan ? 

Lieutenant Wigmore. Yes, sir. It would make a saving of nearly 
two thousand dollars per trip on each transport, I suppose. 

The Chairman. Will you please detail what you learned about the 
Spanish claims? 

Lieutenant Wigmore. These claims lie on the western end of the 
coal deposits, and it is most advantageous for us to own these western 
outcrops. These claims cover the entrance to those outcrops. In 
order for us to enter our own deposits, if we do not control these claims, 
were would be under the necessity of going around to the south, where 
we have to do excessive tunnel and railroad work, and where there is 
no harbor at all. Therefore it is a great advantage for us to decrease 
the first cost of coal and own around where our entrances are easiest 
and where the mining can be done most advantageously and most 
35815—08 - 11 


162 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

cheaply. It is better to do that than to run up your production 
expenses later on. 

These coal deposits rise to about five hundred feet above the sea 
level, which means that for a certain period of time we can run in at 
sea level, mining to the rise in the veins, so that the coal can be dropped 
by gravity methods instead of having expensive machinery for hauling 
it up. Furthermore, these fields border on the best harbor—that is to 
say, where they lie on the coast the reefs are closer to shore, and the 
harbor is there best protected, so that we should not have to put a 
very long wharf in there. This wharf would go out to the reef from 
shore line, and we would have to reach it by a long and very expen¬ 
sive railroad if we do not buy up these claims. Those claims alone, 
I presume, carry something like two hundred and fifty thousand dol¬ 
lars worth of coal. In other words, if we rented those claims from 
them, and paid 15 cents a ton for the coal we got out of there, we 
would bring into the hands of these people something like two hundred 
and fifty thousand dollars. 

Mr. Webber. When does this option run out? 

Lieutenant Wigmore. On the 1st of March next. 

Mr. Olmsted. Then, if we give them $50,000, that would be equal to 
a royalty of 10 cents a ton ? 

Lieutenant Wigmore. No, sir; that would be only one-fifth, or about 
3 cents a ton. 

Before we approached these Spaniards they were negotiating with 
English people to form a company. Their price then was $300,000. 
Lieutenant Markam, who went down to see them, prevailed upon them 
to let us have the fields at $50,000, as in that way they would probably 
get cash for their holdings, and Government works near them would 
be very advantageous. 

Mr. McKinlay. Have they any other claims there ? 

Lieutenant Wigmore. No, sir; they have no other claims, but they 
hold large areas of lands in Legaspi, which is only 15 miles from here. 

Mr. Olmsted. You spoke about the coal measures being 300 feet 
below the sea level in some places, and in others about 300 feet above 
sea level. 

Lieutenant Wigmore. Yes, sir; the island is practically one long 
ridge, sloping both ways to the shore, and about 500 feet above sea 
level, on the south slope, we found our highest outcrops. The drills 
revealed the coal measures at about 300 feet below sea level. 

Mr. Olmsted. What depth of coal is there? [Here witness illus¬ 
trates with a ruler.] 

Lieutenant Wigmore. This was the continuation of some of these 
seams outcropping higher up in this way. We put a drill down here 
at the outcrop. We put down here [indicating], or over here at sea 
level, and found that the continuation of these coal measures was at 
about 300 feet below sea level. 

Mr. Olmsted. Do these seams run up and down? 

Lieutenant Wigmore. Yes, sir; the dips of those which we found 
run in this manner. [Illustrating.] The coal veins run in the direc¬ 
tion of their strike, directly parallel with the axis of the island. It is 
on account of the small depth to which our drills could go that I had 
to work in the two places in order to find the two measures; and I had 
to go down to the sea level to do so. If we had bored farther over in 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 163 

the direction of the dip, we would have had to go 2,000 feet or more in 
depth to reach the lower measures. 

Mr. Olmsted. Can you tell us about what amount of money the 
Government has thus far expended in investigating this coal property? 

Lieutenant Wigmore. Thirty-seven thousand dollars. 

The. Chairman. Have you made what you consider a complete 
investigation ? 

Lieutenant Wigmore. There is only one thing more that 1 would 
like to do, and that is to get a 5,000-foot drill and go a mile away, in 
order to see if these seams continue for that length—that is, continue 
for a mile underground. 

The Chairman. You are sure they continue for 300 feet and that 
those deposits are sufficient to last from fifty to one hundred and fifty 
3 ^ears ? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. Did you have any conversation with Admiral Train 
of the Navy on the subject? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. Will you please tell us what it was he said? 

Lieutenant Wigmore. 1 took up the matter with him, and he said that 
if we could find coal suitable for use in the Navy, that there would 
be nothing more valuable in a strategic way, or in a money-saving 
way. In talking with Lieutenant Boughter, who was Admiral Sterling’s 
aid at one time, I showed him the data which I had about this coal, and 
he said that if our coal continued to show the qualities that our analyses 
developed, there was no doubt that the Navy could use it for cruising 
purposes. Since then I have had a conversation with Admiral Manney, 
and he said that it would not pay the Navy to use coal that has more than 
fifteen-hundredths of one per cent sulphur, whereas ours has one-half 
of one per cent sulphur, and that it was his opinion that this coal could 
not be used in naval vessels on account of its liability to deteriorate 
the boilers, and the expense of replacing them is very great. 

Mr. McKinlay. Did you look up the area of the mining operations 
of the Spaniards in the island of Batan ? Did they ever handle them 
so as to make them commercially valuable ? 

Lieutenant Wigmore. They never went into them extensively 
enough to make them valuable to any considerable extent; but they 
sold all the coal they could get out with ten or twenty miners there 
at seven dollars and a half a ton, which paid them a profit of three 
dollars a ton. They could not get out much because they worked it by 
the “stripping” method. 

Mr. McKinlay. In your operations there what kind of labor did 
you use. 

Lieutenant Wigmore. I used Japanese labor. 

Mr. McKinlay. What did you pay them? 

Lieutenant Wigmore. I paid them from $20 to $30 gold per month. 
Those who got $30 supplied their rations. Those who got $20 were 
provided for by me. I could not pay them by piecework because the 
work was so varied. 

Mr. McKinlay. Do you know what they get in Japan for the same 
work? 

Lieutenant Wigmore. Miners there make about 80 sen (40 cents in 
gold) a day. The company supplies the miner with a room at 7£ cents 
a month, and gives him rations at cost. 


164 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

' Mr. McKinlay. That is about 40 cents a day per man. 

Lieutenant Wigmore. Yes, sir. 

The Chairman. What did you say was the thickness of these seams? 

Lieutenant Wigmore. They vary from twelve inches to thirteen 
feet. Two of our seams we have there are about six feet in thickness 
and about thirty-five feet distant from each other. 

The Chairman. How do they work the mines in Japan? 

Lieutenant Wigmore. They do not work less than two feet, except 
where there is a thick seam. They do not open up anything at much 
less than 3 or 4 feet. 

The Chairman. How is the fresh-water supply? Can water be 
accumulated? 

Lieutenant Wigmore. It can to a certain extent. On that side of 
the harbor they can probably accumulate from 60,000 to 100,000 gallons 
a day, by means of reservoirs, during the dry season. It would not 
be sufficient for watering ships, but it would be for any establishments 
that need to go up there. On the other side of the harbor there is an 
ample supply of water where we can get it for shipping purposes, 
and which can be carried by gravity to the ships. In fact there is a 
little reservoir already there where launches go for water, and where 
we get a good deal during the dry season. 

The Chairman. When you say that these veins are 35 feet from 
each other, do you mean they are above each other and some other 
material in between them? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. What is that material? 

Lieutenant Wigmore. Sandstone. 

The Chairman. What about the timber supply? 

Lieutenant Wigmore. The timber supply is very fine. They have 
all varieties of wood there, from the soft to the very hard, and the 
timber necessary for mining purposes could be cut down at a mini¬ 
mum cost. 

The Chairman. What kinds of woods did you find there? 

Lieutenant Wigmore. I can not remember the names of the dif¬ 
ferent varieties. 

The Chairman. Have you any hard rock for construction purposes? 

Lieutenant Wigmore. There is plenty of limestone of excellent 
quality. 

The Chairman. Then you have rock, timber, and water. 

Lieutenant Wigmore. Yes, sir. We have rock, timber, and water, 
and we also have a clay which will make good brick, so that we have 
everything that will be needed for establishing a coal-mining station. 
We will not have to take anything down there except the machinery. 

Mr. Rucker. Suppose that coal was developed by private capital, 
would not the Government naturally buy it because it would be the 
cheapest and most convenient way to get it? 

Lieutenant Wigmore. I think so. 

Mr. Rucker. And use it in the same quantities as now? 

Lieutenant Wigmore. Probably; yes, sir. 

Mr. Rucker. And having a demand for three or four hundred 
thousand tons, would not the Government gladly contract with some¬ 
body to deliver coal at two or three dollars a ton? 

Lieutenant Wigmore. Yes, sir. 






HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 165 

Mr. Rucker. Would not that be an inducement to private capital, 
just as much as to the Government, to go into the coal-mining business? 

Lieutenant Wigmore. Not exactly. In the first place, it is the 
uncertainty to be contended with. They have got to introduce the coal 
themselves. Before going in they have no guaranty that their expendi¬ 
tures will be returned to them. 

Mr. Rucker. Have wot these investigations demonstrated that the 
coal is there and that it can be worked profitably? 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. The Government would immediately become a cus¬ 
tomer, and would that not have a tendency to induce capital to go 
there, you think? 

Lieutenant Wigmore. It would if they were placing it there with a 
certainty, but the} T can not be sure that the Government will buy 
until they have made their investigation. It is easier to get capital if 
one has a contract, but if one has to go to somebody else and say, 
“We are pretty sure that the Government will take this coal,” then it 
is a different matter. 

Mr. Rucker. That being the most convenient and the cheapest coal, 
and also the best coal that the Government can get, would not the 
Government logically buy there? 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. I can not understand why if capital to the extent of 
a million dollars is willing to go there and invest in the digging of 
coal it should take fright at the fifty thousand dollars it would cost 
for the privilege. 

Lieutenant Wigmore. They can not get it for fifty thousand dollars 
now. The Spaniards are already in correspondence with English people. 

Mr. McKinlay. The fact that the Government might purchase those 
claims and own them would that give them a leverage to obtain from 
the contractors a lower price for the coal than if other parties bought 
the claims and operated them? 

Lieutenant Wigmore. I think it would. 

Mr. McKinlay. How much lower do you think they would get coal 
per ton if they owned the claims than they would if they had to buy 
through private parties? 

Lieutenant Wigmore. They would save at least a dollar a ton. 

Mr. Rucker. Why? 

Lieutenant Wigmore. Because the market in the Philippines pays 
five dollars and a half per ton for Japanese coal, and the Government 
pays four dollars and seventy-five cents per ton by contract. 

The Chairman. This bill contemplates that the Government shall 
have the privilege of buying at 10 per cent above the cost price. 

Mr. Olmsted. I understood the lieutenant to say that if a private 
person obtained the option to these lands he might not be willing to 
let the Government have the coal at a price estimated on the cost, plus 
10 per cent profit, but that he might insist on 100 per cent profit. 

Mr. Rucker. It seems to me that if a private individual contem¬ 
plated this, then the Government would not have very great difficulty 
in contracting with somebody to develop those mines. 

The Chairman. The Government of the United States has reserved 
all the land back of these claims, has it not? And this is a very exten¬ 
sive property. 


166 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


Lieutenant Wigmore. Yes, sir. The Secretary says that the Scotts 
have already made a tentative proposition based on cost price, plus 10 
per cent profit. 

Mr. Rucker. Does this bill contemplate that the money should be 
paid out of the Philippine treasury, or out of the Treasury of the 
United States? 

Lieutenant Wigmore. The Government of the United States would 
pay for the lands. 

Secretary Taft. It was suggested as a military measure, rather than 
a civil one, and I supposed that we would go before the Military Com¬ 
mittee, but the Speaker sent us before this committee.. 

Mr. Rucker. It occurs to me that the most valuable thing is the 
water of the harbor. I am not much stuck on the Government going 
into the mining business. 

Mr. Olmsted. This bill does not contemplate the Government going 
into the mining business. 

The Chairman. The Secretary of War said that he was opposed to 
it, and that the Philippine Commission is opposed to having either the 
Commission or the Government go into the coal-mining business, but 
that they looked upon this as an opportunity for the Government to 
protect itself from private companies—that is, they think that the 
Government could save itself from four to five hundred thousand 
dollars a year. 

Mr. Rucker. A year? 

The Chairman. Yes, sir. 

Mr. Rucker. The Lord only knows how much we could save if the 
Government owned a coal mine in Pennsylvania. Suppose that the 
Government owned a coal mine in Pennsylvania or West Virginia, and 
some other coal-mining company started in business there- 

The Chairman. It might have been all right enough if they had 
taken it in the first instance. 

Mr. Olmsted. It would have been a very good thing for the Govern¬ 
ment to have bought it some years ago. 

Mr. Parsons. Has the Government tried any of this coal? 

Lieutenant Wigmore. Yes, we have tried some of it. 

Mr. McKinlay. What did you do with the coal that you took out? 

Lieutenant Wigmore. 1 used some of it in my own launch and the 
rest went to the transports for test. 

Mr. McKinlay. Was any of it sold? 

Lieutenant Wigmore. No, sir. 

Mr. Parsons. Does the Navy Department use any Japanese coal 
now? 

Lieutenant Wigmore. None that I know of. They use Pocahontas 
coal entirely. 

Mr. Parsons. This is not as good for them as Pocahontas coal ? 

Lieutenant Wigmore. No, sir. The only point about this is that 
there is such a small amount of sulphur, no smoke or ash, that it 
might be used for cruising purposes. It would never be used in time 
of war; it limits the steaming radius of the vessels too much. 

Mr. Parsons. W e always prefer to use Pocahontas coal ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. What is the coal of the West Virginia mines? Would 
it not be better for us to buy a mine in West Virginia? 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFATRS. 167 

Lieutenant Wigmore. I think it would be if you could get it cheap 
enough. 

Mr. Parsons. How many tons of this coal did you mine? 

Lieutenant Wigmore. Four hundred tons. 

Mr. Parsons. What was the cost per ton? 

Lieutenant Wigmore. About two dollars. 

Mr. Parsons. What do you include in that $2 a ton? 

Lieutenant Wigmore. The cost of the work from the time we put 
the pick into the ground until the coal was at the seashore. Not the 
office expense or any expense for the plant, etc. The original expense 
for the drills was included. I divided it up the best 1 could. 

The Chairman. If the Government owned these Spanish claims, 
and mines were opened on them, what would be the distance from 
the mine to the wharf ? 

Lieutenant Wigmore. It would be from 200 to 400 yards from the 
mine to the ship. 

Mr. Webber. How far did you go below the surface to get this coal? 

Lieutenant Wigmore. I entered it some 500 feet above sea level, 
and ran in from 200 to 300 feet. 

Mr. Rucker. You made several entries? 

Lieutenant Wigmore. Yes, sir; I made several entries. 

Mr. Parsons. Any one who goes in there has to do some filling in, 
does he not? 

Lieutenant Wigmore. That is for the works; yes. I laid out the 
ground with the idea of putting a large coaling station there. 

Mr. Parsons. This bill provides that the Government shall get coal 
at a price not exceeding 10 per centum above the cost price of the 
coal—that is, $2.20. 

Lieutenant Wigmore. Yes, sir; $2.20. 

The Chairman. When did these Spaniards get these options ? 

Lieutenant Wigmore. They took them up in 1890, I think. After 
our law was put in operation they performed the work necessary to 
keep the claims valid. Under the Spanish law $100 worth of labor 
had to be performed upon each claim. 

Mr. Olmsted. Did the Spaniards own the surface or the coal 
privilege ? 

Lieutenant Wigmore. Only the coal privilege. 

Mr. Olmsted. Who owns the surface? 

Lieutenant Wigmore. The State, sir. 

Mr. Smith. As I understand, those Spanish claims cover the lower 
end of the island where the harbor is located? 

Lieutenant Wigmore. Yes, sir. 

Mr. Smith. While the Government owns the coal back of the 
Spanish claims, yet, if we do not obtain the Spanish claims, we will 
have to construct a harbor and build a road back to where the coal 
would be taken out, in order to operate our claims. 

Lieutenant Wigmore. Yes, sir. 

Mr. Smith. About what length would that road have to be were we 
to get into the harbor where these claims lie? We can not make a 
harbor at any other place. 

The Chairman. We would have to build a tunnel or a railroad. 

Lieutenant Wigmore. Yes, sir. It would be expensive on account 
of the limestone ridges. 


168 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Smith. Have you made any estimate of what the expense would 
be of building the road, so that we could utilize the coal and get it out 
into the harbor? 

Lieutenant Wigmore. No, sir. In the first place we would have 
to make long entries to get into the coal seams; and in the second 
place, the necessary expense to construct that railroad would be so 
great as to render it unfeasible. 

Mr. Smith. My object in asking was to ascertain whether or not you 
had any idea as to what it would cost us, so that we could make a com¬ 
parison between the $50,000, in case we accept the proposition of 
the Spaniards who hold the lands, and the expense at which we would 
be placed in order to utilize our coal if we did not obtain the land. 

Lieutenant Wigmore. I may say that the expense would come close to 
$50,000. I would not like to make any positive statement about that. 
It is a rough country, and I have never made a personal survey out 
there. 

Mr. McKinlay. How far would it be? 

Lieutenant Wigmore. About two and one-half or three miles around, 
sir. 

Mr. Smith. If we attempted to do anything of that kind it would 
cost us two or two and one-half times as much as the purchase of the 
Spanish claims. 

Lieutenant Wigmore. Yes, sir. The initial expense to us would be 
much greater than the cost of that option, and the running expenses 
would always be greater than if we made our entrance where these 
claims lie. 

Mr. Parsons. Under this bill, by which the Government would get 
the coal at cost price plus 10 per cent, I want to ask whether or not 
some interest on the cost of the plant and a provision for a sinking 
fund, etc., would be included in the cost price per ton of the coal? 

The Chairman. That is an important item. 

Lieutenant Wigmore. It would be. Yes, sir. 

Mr. Parsons. How much of an investment would the people who 
would open those mines have to make there ? 

Lieutenant Wigmore. I had a long conversation with Mr. Scott and 
Mr. Howard, who were the gentlemen interested in San Francisco. 
Mr. Scott is the capitalist referred to. Their intention is to build a 
coaling station and put their own fleet in, and, after they get the Gov¬ 
ernment market, to work on the Hongkong market and also to get the 
Pacific coast mail steamships into Manila. In order to do that they 
will have to spend at least a million and a half dollars, including the 
cost of the fleet and everything else. 

Mr. Olmsted. That would include the cost of the fleet? 

Lieutenant Wigmore. Yes, sir. I went over the whole matter with 
them, and Mr. Howard was quite ready at that time to look into the 
proposition. 

Mr. Rucker. In estimating the cost of the coal, the interest would 
properly be charged on the investment in the organization of this fleet 
as a part of the cost of mining the coal. That being so, the natural 
repairs and expenditures necessary to replace 4 4 cripples,” or worn-out 
ships, and to supply machinery during the whole period would con¬ 
stantly be enlarged. 

Lieutenant Wigmore. Transportation should not be included, except 




HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 169 

the carrying of the coal from the mines to the wharves. Of course 
it would cost a great deal every year to keep up the shipping. 

Mr. Olmsted. What do you estimate the mining plant would cost? 

Lieutenant Wigmore. It'would probably cost about $500,000. 

Mr. Olmsted. How much would that adcl to your estimate of $2 per 
ton as the cost of the coal ? 

Lieutenant Wigmore. I figure that the cost of the coal would be 
about $1.50 a ton at the pit’s mouth. 

Mr. Olmsted. Would that include any interest on the investment 
in the plant? 

Lieutenant Wigmore. No; the mining expenses would be $1.50 
when you put into these expenses the interior transportation costs. 
The coal at the pit’s mouth, including the expense of running the min¬ 
ing machinery, would be about $1.50 per ton. Taking the transporta¬ 
tion charges, etc., into account, that would bring the price up to about 
$2 at the ship. 

Mr. Parsons. Did these gentlemen with whom jmu talked say what 
the cost would be—that it would not exceed $2 ? 

Lieutenant Wigmore. They did not go into that at all; they took my 
figures. But the cost of coal at the pit’s mouth is $1.09 per ton in the 
United States, and in Japan it is $1.33. That difference is due to the 
mining machinery in the United States, which is not in use in Japan. 

Mr. Olmsted. In your estimate of $2 per ton as the cost, do you 
include the interest on the plant? 

Lieutenant Wigmore. That estimate of $2 includes the depreciation 
on the entire plant to where the coal is placed on the ship, but does 
not include any further transportation expenses. 

Mr. Olmsted. Does that estimate mean placing the coal on the dump 
ready to be loaded into the ship; the cost not to exceed $2 per ton 
including 6 per cent interest on the cost of the mining plant, the prop¬ 
erty, the office expenses, and the depreciation? 

Lieutenant Wigmore. Yes, sir; but not interest on the cost of the 
plant. 

The Chairman. You say that the transportation from the mouth of 
the mine to the wharf would be from two to four hundred j T ards? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. This particular transportation charge, then, would 
be practically nothing? 

Lieutenant Wigmore. Yes, sir; I have put a very liberal estimate 
of 20 cents a ton on the transportation charges. In the United States 
it does not run more than 1 to 3 cents per ton for short hauls. I have 
put that estimate on because of the cost of transportation in Manila 
Bay, where the coal has to be carried out to the ships by lighters. 

Mr. Rucker. What are the usual transportation charges from this 
coast to the Philippine Islands on coal? 

Lieutenant Wigmore. In foreign bottoms we have recently been 
offered transportation at $1.50 per ton, and in American bottoms, $7 
per ton—freight charges alone. 

Mr. Rucker. For freight charges alone? 

Lieutenant Wigmore. Yes, sir; from the Atlantic coast to Manila. 

Mr. Parsons. I notice in your report that the freight charges from 
Legaspi to Manila are $3 per ton, but you assume a rate of $1.25? 

Lieutenant Wigmore. Yes, sir. That is, figuring on the commercial 
ownership of those vessels. 


170 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


Mr. Parsons. Do these gentlemen with whom you have talked indi¬ 
cate that they would transport it to Manila at $1.25 per ton? 

Lieutenant Wigmore. No, sir. They did not indicate the price at 
all. They said that they would prefer to put in their own fleet, but 
most of our transports can go there and get the coal at the dock. 

Mr. Parsons. But that would not apply to the Navy and to the 
civil government. 

Lieutenant Wigmore. It applies to both if they wished to go there; 
and there is no reason why they could not go. 

Mr. Ruckfr. In this closing part of section two of the bill it is 
provided that the Government shall pay for the coal a price not 
exceeding 10 per cent above the cost of production. These estimates 
would be made by you, or by others representing the United States 
Government? 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. Of course, before contracts were made by any solvent 
company or corporation, they would figure on these things, and the 
American, or proposed estimate, would have to be a concurrence of 
the two minds—the Government and the coal company. When you 
came to compare notes, would there probably not be considerable 
divergence of opinion? 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. And the gentlemen who are interested in selling to the 
Government at 10 per cent above the cost price of the coal, would it 
not be characteristic for them to swell that cost ? 

Lieutenant Wigmore. Yes, sir; that, of course, would have to be 
arranged for in the (eases, and the on\y basis we could have would be 
the cost price of similar coal in the United States. 

Mr. Rucker. You put the mining cost down there considerably 
above what it is here, do you not? 

Lieutenant Wigmore. Yes,'sir; I want to be on the safe side. 

Mr. Rucker. I know of people here who are making money by 
putting coal on the cars at onty 90 cents a ton. 

Lieutenant Wigmore. That is very cheap. That is cheaper than 1 
thought it could be done. 

Mr. Rucker. I also know parties who get considerable dividends by 
selling coal at that price. Now, over here you estimate one dollar and 
a half as the actual cost per ton, which is the price it costs here in 
some places. But, conceding the greater cost there, the point I make 
is that the coal-mining improvements would probably include many 
items of expense that you have not taken into account. 

Lieutenant Wigmore. It is up to us to watch that, and see that they 
do not put in anything that we do not put in here in the United States. 

Mr. Rucker. The question I was making was, is the Government 
to get the coal at 10 per centum above the actual cost price? 1 

Lieutenant Wigmore. We have got to watch out for that. 

Mr. Webber. Is it your opinion that if the Government should pay 
$50,000 for this property, and no company or people could be induced 
to operate the mines it would still be a" good investment for us to 
turn around and sell it to some one else? In other words, could the 
Government get out after paying the $50,000? 

Lieutenant Wigmore. I think so; yes. The value of the timber 
land alone is equal to the price. 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 171 

Mr. Olmsted^ You would not get the timber under this option? 

Lieutenant Wigmore. Yes, if we got coal there. 

Mr. Rucker. Has the Government the timber rights? 

Lieutenant Wigmore. The mining rights carry with them the use of 
the timber; yes, sir. But, if we wanted the money, we could sell the 
timber rights if we pleased. 

Mr. Olmsted. These options carry the timber rights on these 300 
acres ? 

Lieutenant Wigmore. Yes, sir. The timber for mining purposes 
only. 

Mr. Rucker. You saj' that the timber could be sold for $50,000. 
This being so, we are then making a pretty good bargain. 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. We are getting it pretty cheap if those figures are 
right; and 1 have no reason to question them, as the gentleman’s 
experience is good. 

The Chairman. Do you think of anything else you would like to 
say. Lieutenant? 

Lieutenant Wigmore. No, sir. I think I have stated everything. 

The Chairman. 1 think that is all, Lieutenant. 


PURCHASE OF COAL LANDS IN THE PHILIPPINE 
ISLANDS. 


Committee on Insular Affairs, 

Thursday , February £, 1906. 

STATEMENT OF LIEUT. H. L. WIGMORE, C. E.—Continued. 

The Chairman. I desire to ask whether you have investigated the 
reports of the United States census since you last appeared before 
the committee, with a view to ascertaining the cost of mining coal in 
the United States, as given in these reports? 

Lieutenant Wigmore. I have; yes, sir. 

The Chairman. Can you give those figures as you have taken them 
from the United States census reports ? 

Lieutenant Wigmore. Yes, sir. These figures were taken from the 
Report of the Twelfth Census, and were compiled from figures 
received in 1902 by the coal bureau and refer to the bituminous coal 
production throughout the United States. In that same volume 
from which these figures were taken (Mines and Quarries) will be 
found, also, the individual production of each State, but I took these 
figures merely as an average. 

The Chairman. As I understand it, the figures reported in the 
volume referred to were given to the officials of the Census Bureau 
by officers of the various companies? 

Lieutenant Wigmore. Yes, sir. They were collected by the agents 
of the Census Bureau. 

The Chairman. From the mining companies, themselves. 

Lieutenant Wigmore. Yes, sir. The report showed the items of 
cost as follows: For salaries there were expended $14,511,924. Sala¬ 
ries in this case includes the pay of clerks and officials both present 
at the mining properties and at the central offices. For w T ages there 
were expended $181,482,288. These wages include the pay given to 
the miners proper—that is, the men who take out the coal—and are 
intimately connected with the operation—such as miners, helpers, 
engineers, and mechanics of various sorts. The amount expended 
for contract work was $1,244,214. Contract work covers in general 
work such as shaft sinking and entry driving. 

Mr. Rucker. Opening up the mines. 

Lieutenant Wigmore. Yes, sir. Opening up the mines. For mis¬ 
cellaneous expenses there were expended $16,774,459. Under mis¬ 
cellaneous expenses were placed office rent, royalties, rent of plant, 
rent of property, insurance, interest, and other expenses of that 
nature. For supplies and materials there were expended $24,798,922. 
All this gave a total of $238,811,80 ( as the cost of producing 
260,216,844 tons of bituminous coal, which gives us a net cost per 
ton at the mouth of the mine of 91.8 cents. The average price re¬ 
ceived at the mouth of the mine throughout the United States was 
$1.12. In the State of Illinois, which is one of the largest bituminous 
coal producers, the average price received was $1.03 per ton, the 
172 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 173 

prices there ranging from 82 cents to $2.04 per ton. If we examine 
these figures for the cost of production of coal, we find that the 
salaries were 6.07 per cent of the total; miscellaneous expenses, 7.02 per 
cent, and contract work, 0.5 per cent; showing the greatest part of the 
cost lay in the wages, which amounted to 75.9 per cent, and in 
supplies and material, which amounted to 10.3 per cent of the cost. 
Therefore when we say in our bill that the company shall receive 
10 per cent above the cost, and the question arises as to what would be 
included in that cost, as to whether interest, depreciation, etc., would 
come in, we find that that item in the cost of coal in the United 
States amounts to only 6 per cent of the cost price, so that it is not 
very material when it comes to figuring on what this cost would be, 
wages and supplies forming the greater part of that cost. 

The Chairman. Your testimony the other day was, as I recall it, 
that you mined about 400 tons of coal in the island of Batan ? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. Of course you had nothing like a thoroughly con¬ 
structed and up-to-date plant? 

Lieutenant Wigmore. We had no machinery there at all of any 
kind. 

The Chairman. And with the comparatively small production 
and poor facilities for mining, what did the coal cost you per ton? 

Lieutenant Wigmore. It cost me at the mouth of the entry $1.50. 
That entry work, such as comprised this cost, is usually done by con¬ 
tract work in this country and is rather expensive, because in entries 
the entire roof has to be timbered as you go in. I was going in on 
coal entirely and could therefore produce that coal while I was 
doing this entry work. Under usual circumstances this entry work 
would be run in perhaps parallel to the seam, and chambers would be 
opened up therein from these entries, so that the work that I did is 
really no guide to the expense of mining coal there. 

The Chairman. I believe you said that an up-to-date plant would 
cost $500,000. 

Lieutenant Wigmore. Yes, sir. 

The Chairman. What, in your judgment, w r ould it cost to mine 
coal there? 

Lieutenant Wigmore. Of course everything depends upon the ma¬ 
chinery that is put in, the labor that we would get, the condition of 
the roof and floors, etc. I would not like to say anything definite, 
but I have put $1.50 as the outside figure, simply because that has 
been my experience there. It could be done with the tools I had. 

Mr. Kinkaid. Where was this mining done ? 

Lieutenant Wigmore. On the island of Batan. 

The Chairman. Will you point out on the map, for the benefit of 
Judge Kinkaid, just where the island of Batan is located? 

Lieutenant Wigmore. Right in there, sir [indicating on map]. 

The Chairman. Will you please point to that again ? 

Lieutenant Wigmore. The island of Batan is down here [indicat¬ 
ing]. Manila is here [indicating]. This is one of the termini of 
the railroad around the island. This port is Legaspi, and these are 
the San Bernardino Straits [indicating], through which our trans¬ 
ports come from San Francisco to Manila. 

The Chairman. This island of Batan is about 10 by 5 miles, and 


174 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

shows coal in paying quantities throughout practically its entire 
extent ? 

Lieutenant Wigmore. The indications of coal are far more abun¬ 
dant in the western half of the island, where our reservations are. 
I found few outcrops in the eastern half, though some seams have 
been discovered there. They are later deposits apparently. 

Mr. Rucker. Which is the eastern half ? 

Lieutenant Wigmore. This is the eastern half, and that is the 
western half [indicating]. Our reservations are on the western half. 

The Chairman. How t close to the line of travel of ships coming 
from the United States and Honolulu through the San Bernardino 
Straits is this island of Batan ? 

Lieutenant Wigmore. About 50 miles. 

Mr. Kinkaid. Fifty miles out of the way of the regular line of 
travel ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Crumpacker. I understand that there is no considerable 
amount of coal mined at that place now. 

Lieutenant Wigmore. No, sir. There is no considerable amount 
mined there now. We were simply investigating to find out if the 
deposits were worth securing. 

Mr. Crumpacker. Could you get sufficient labor to operate those 
mines ? 

Lieutenant Wigmore. I got most of my miners from the Japanese 
colony in the Philippines. The outside labor was done by Filipinos. 

Mr. Crumpacker. Do you think that sufficient labor could be got¬ 
ten to open up and operate a large mine continuously and uninter¬ 
ruptedly ? 

Lieutenant Wigmore. Yes. We could obtain the Japanese labor 
that would be necessary. I have letters from people in Japan from 
whom we could obtain miners. 

Mr. Crumpacker. Do you know the scale of wages that are paid ? 

Lieutenant Wigmore. Whereabouts, sir? 

Mr. Crumpacker. Anywhere in the Philippines. 

Lieutenant Wigmore. There is no mining done in the Philippines, 
and no scale has been made. 

Mr. Crumpacker. Are the Filipinos good miners? 

Lieutenant Wigmore. No, sir; they are no miners at all. 

Mr. Crumpacker. I refer to the Japanese miners. 

Lieutenant Wigmore. Yes, sir. 

Mr. Crumpacker. You would have to go to Japan to get your 
laborers ? 

Lieutenant Wigmore. Yes, sir. Either there or to Korea; but the 
Koreans are more shiftless than the Japanese. Japanese and Korean 
laborers could be brought in under the head of “ expert labor.” The 
Filipinos could be taught to mine, but at present they are unsatis¬ 
factory. 

Mr. Kinkaid. Are you in the Army now ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Kinkaid. And you were in that capacity when you were devel¬ 
oping these mines ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Kinkaid. It was an investigation, was it ? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 175 

Lieutenant Wigmore. Yes, sir. 

Mr. Kinkaid. And this investigation was made on account of the 
option which the Government holds ? 

Lieutenant Wigmore. The investigation was ordered, and the op¬ 
tions were then obtained. 

Mr. Kinkaid. Yes; it was pursuant to the pending negotiations 
that you made the investigation ? 

The Chairman. You were there two years investigating, I believe? 

Lieutenant Wigmore. Yes, sir. 

Mr. Jones. Mr. Chairman, if you have no more questions to ask 
just now, I would like to ask two or three questions with reference to 
the location of these coal fields. How far is it from this little island 
of Batan to Manila ? 

Lieutenant Wigmore. It is about 400 miles—a little over that, 
about 420 miles. 

The Chairman. By water? 

Lieutenant Wigmore. By water; yes, sir. 

Mr. Jones. How far would it be to Olongapo from Manila? 

Lieutenant Wigmore. About 50 or 60 miles. I can not say accu¬ 
rately. 

Mr. Jones. That would make it close to 500 miles from the island 
of Batan to Olongapo. This island of Batan is on the Pacific side of 
the archipelago, and Olongapo is on the Chinese Sea side? 

Lieutenant Wigmore. Yes, sir. 

Mr. Jones. I would like to know whether or not it would be possi¬ 
ble, in your judgment as an army officer of the Engineer Corps, for 
the United States Government so to fortify this little island in time 
of war that w T e could always get a supply of coal there if w T e wanted 
to? 

Lieutenant Wigmore. The fortification of the island would be very 
simple, and it could be done at comparatively little expense. These 
two points can be very well guarded [indicating on msfp]. They are 
both high headlands, so that this entrance could be commanded from 

2 to 3 miles outside of this coal harbor [indicating]. No entrance 
whatsoever could be made from the north side, and troops could not 
be landed there and gotten across to the south side without great 
exertion. So that the fortification problem of the island of Batan 
would be a very simple one. 

Mr. Jones. How wide is the opening there [referring to the map] 
where vessels would have to enter ? 

Lieutenant Wigmore. That opening is about 2 miles wide—possibly 

3 miles. 

Mr. Jones. If we were to establish a naval station at Olongapo 
and in time of war had to rely upon this point for our supply of coal, 
we would-have to fortify both Olongapo and this island of Batan. 

Lieu tenant Wigmore. I think they should be fortified unless pro¬ 
tected by naval vessels, which, naturally, is not the desirable course. 

Mr. Jones. If the United States Government wanted to establish a 
naval station and coal supply depot in the Philippine Islands, there 
being sufficient water there, and the place being susceptible of fortifi¬ 
cation, what w T ould you think of that point as a place for such naval 
and coaling station? 

Lieutenant Wigmore. I am very much in favor of that being made 
a coaling station. I think that with the exception of the fact that it 


176 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

is on the east coast it is almost perfect. It is not a point of protec¬ 
tion for Manila. 

Mr. Jones. No; it is on the east coast, but still it is almost in the 
track of steamers from San Francisco to Manila. 

Lieutenant Wigmore. Yes, sir. It is the nearest good harbor to 
San Francisco or to any ships coming from the Pacific coast. 

Mr. Jones. Are there any coal deposits near Olongapo ? 

Lieutenant Wigmore. None that are known of. There is some coal 
reported in here [indicating on map], but nothing definite is known 
about it. 

Mr. Jones. So that in your opinion our coal supply in the Philip¬ 
pines would have to come from this island of Batan ? 

Lieutenant Wigmore. It could come from there; yes, sir. 

Mr. Jones. It would have to come from there, would it not, so far 
as you know to the contrary ? 

Lieutenant Wigmore. Yes, sir; only my belief is that when these 
operations are started here operations will also be started immediately 
in Cebu. 

Mr. Jones. That is on the eastern coast ? 

Lieutenant Wigmore. Yes, sir. There are large deposits in Cebu 
and Polillo, and if it is found that the coal in Batan is good it will 
not be long before capital will come in, and these will be sources of 
supply also. As regards an uninterrupted supply from Batan, the 
railroad would come in through this neck and go out here, so that the 
coal could be shipped to our vessels on this side [indicating west on 
map]. We have an interior route there, and we would not have to 
carry it out there (San Bernardino Straits). 

The Chairman. How far is the island of Batan from Legaspi? 

Lieutenant Wigmore. Fifteen miles. 

Mr. Smith. How near to Manila would the contemplated railroad 
that is to be constructed run? To what point on the east coast? 

Lieutenant* Wigmore. The proposed road around here [indicating 
on map] is not a continuous road to Manila. There is one across 
here, and another across here, which crosses the neck. Another 
crosses here to Manila, but there are no continuous lines proposed at 
present. 

The Chairman. Owing to the difficulty of mountain construction ? 

Lieutenant Wigmore. That is what they claim. 

Mr. Smith. Then, if coal should be mined on that island for use 
in Manila, it being about twenty-four hours’ sail from the island to 
Manila, it would really be more convenient to take it by vessels, 
would it not ? 

Lieutenant Wigmore. I think the cheapest, way would be for boats 
to go down there and get their supply. Otherwise what would have 
to be taken to Manila would be carried by boat. 

Mr. Jones. I understand that our ships of war would not use this 
coal, except in time of war, when communication would be cut off 
from the United States. This coal being on the Pacific side of the 
archipelago, and being 500 miles from Olongapo, and nearly the same 
distance from Manila, might not the connection between that island 
of Batan and those places be cut. off just as easily in time of war as 
the connection with the United States? 

Lieutenant Wigmore. If a railroad was constructed through there 
it could not. If we depended upon vessels to carry it from Batan to 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 177 


Manila, that line of communication could be much better protected 
than a line from the United States. 

Mr. Jones. Yes, so far as the straits are concerned; but what would 
prevent the interruption of traffic between that island and Hongkong? 
For instance, on the China Sea side from Hongkong? 

Lieutenant Wigmore. We would have our Navy to depend upon. 
This.line of communication is far shorter than the other one. 

Mr. Jones. That is the only difference—that the line of communi¬ 
cation is shorter there; but it would have to be protected just as the 
line between San Francisco and the Philippines would have to be 
guarded ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Jones. And in order to prevent the cutting off of the coal sup¬ 
ply it w^ould be necessary to guard that line of 500 miles by our ships? 

Lieutenant Wigmore. Yes, sir. That would have to be looked 
after. 

Mr. Jones. Do you not think that would be a strong argument in 
favor of fortifying and establishing a naval base and coal-supply 
station at the island of Batan rather than at either Cavite or Olon¬ 
gapo? 

Lieutenant Wigmore. So far as the line of communication is con¬ 
cerned. Of course it all depends upon where the operations were 
taking place. If they were on the west coast, the coal would have to 
be taken around there. So far as the fortifying is concerned, I think 
this is much easier than the other. 

Mr. Jones. If the United States should relinquish control over the 
Philippines some day and desire to retain a naval base and coaling 
station there, do you not think that the island of Batan would be the 
better place ? 

Lieutenant Wigmore. I think so; yes, sir. It has only one draw¬ 
back, and that is that it is on the east coast, which is not the coast 
where the greatest traffic takes place. 

Mr. Rucker. The question, as I understand it, was in the event that 
the United States should relinquish title to the islands. Have you 
figured on this? 

Lieutenant Wigmore. No, sir; I have not. 

Mr. Rucker. I suppose that is going a long ways off, but I just 
wanted to find out whether or not there has been any thought on that 
question. 

Mr. Jones. There has been a great deal of talk on that subject in 
connection with the establishment of a naval base at Olongapo. A 
great many people who advocate Olongapo rather than Cavite take 
the ground, that that would be the best place in the event that we 
relinquish control over the Philippine Islands, and very strong in¬ 
fluences are now being brought to bear in that direction. The matter 
is before the Naval Committee to have the navy-yard transferred 
from Cavite to Olongapo, and many of those who favor that transfer 
openly state that they do so upon the ground that if we ever relin¬ 
quish the islands and have a naval base at Cavite we would have to 
relinquish the naval base, too; whereas if we had it at Olongapo we 
could retain it and still give up the islands. And so I want to get 
the lieutenant’s idea upon the subject—whether or not, in that view, 
it would not be better to have the naval station and coaling station 
at the island of Batan than to have it at Olongapo. 

35815—08 - 12 


178 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Lieutenant Wigmore. I would not like to go on record as giving 
any opinion on the naval-base propositions at all. That is a matter 
for the naval experts to decide. 

Mr. Jones. Ought not a naval station to be as near as possible to 
the coaling station ? 

Lieutenant Wigmore. There should be a coal station at the naval 
base. Yes, sir. 

Mr. Jones. And as there could not be one at Olongapo, it seems, 
and the coal would have to be carried a clear 500 miles there, does it 
not seem to you that Batan would be the better place ? 

Lieutenant Wigmore. Looked at from just that point of view, yes. 
But a great many other considerations that I am not familiar with 
must be taken into account in figuring on that proposition, and I 
would not, therefore, like to put myself on record in this connection. 
As a coaling station, I think this is the best location in the islands. 

Mr. Jones. And you also think it could be easily fortified and 
protected ? 

Lieutenant Wigmore. Yes, sir; very easily. 

Mr. Jones. And there is a good harbor there? 

Lieutenant Wigmore. An excellent harbor. Yes, sir. 

Mr. Jones. One of the best in the islands? 

Lieutenant Wigmore. Yes, sir. One of the best in the islands, and 
that east coast will some day see a great amount of traffic go there 
when Legaspi or Tobaco is opened as a port of entry on account of 
the great amount of hemp going out from those ports. 

Mr. Jones. Transports going from San Francisco to Iloilo or Cebu 
would, of course, go through these straits? 

Lieutenant Wigmore. Yes, sir. They all go through these straits 
coming from San Francisco. The main reason they go back by 
way of Japan is to secure coal there. 

Mr. Jones. A naval base, then, at the island of Batan would be a 
great deal nearer to those large ports of entry at Iloilo and Cebu ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Jones. And communication with those points could be much 
more easily protected by our Navy if our basis was at Batan than if 
it was at Olongapo ? 

Lieutenant Wigmore. I believe so. 

Mr. Jones. Another argument in favor of Batan would be that it 
is much nearer San Francisco than Olongapo. 

Lieutenant Wigmore. It saves that trip around the island from 
San Francisco, either this way or that way [indicating on map]. 

Mr. Jones. If the transports sailed from San Francisco through 
those straits to Manila it would save how many miles? How much 
shorter would it be through those straits to Manila than by going 
around the upper end of Luzon to Manila ? 

Lieutenant Wigmore: I have never calculated that. But their last 
stop is about east of Batan, so that if they go north they have that 
distance (by way of the northern end of Luzon) to go, and if they 
continue their route instead of stopping there they have this distance 
to go (by way of San Bernardino Straits). 

Mr. Jones. About 400 miles. 

Lieutenant Wigmore. Easily that much. 

Mr. Parsons. It is because they stop at Guam that they go through 
the straits. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 179 

Lieutenant Wigmore. On account of Hongkong and Guam. 

_ Larsons. If they were going straight to San Francisco from 
the 1 hilippmes they would take the other route and go around the 
northern end of Luzon. 

Mr. Jones. If they were going to Iloilo or Cebu, would it be nearer 
to go around the northern part of Luzon or through the straits, with 
reference to either Hongkong or Guam? 

Lieutenant Wigmore. I think it would be nearer to come right 
down here [indicating on map]. I would not like to say surely with¬ 
out looking at the chart. Here is Manila here [indicating on map], 
and here is Cebu; and Olongapo is right up here. 

Mr. Kinkaid. Is there a railroad projected from Olongapo to 
Manila? There is a railroad enterprise in contemplation starting 
from Olongapo, is there not ? 

Lieutenant Wigmore. Not that I know of. 

The Chairman. As I understand it, from your former testimony, 
it is your best judgment that coal can be put on a ship in the harbor 
at Batan for from $2 to $2.20 ? 

Lieutenant Wigmore. At an outside price of $2 per ton. 

The Chairman. At the outside price of $2 a ton on a ship at 
Batan ? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. Then the 10 per cent which the bill proposes to 
add to the cost price would be 10 per cent of $2, making the total cost 
$2.20 per ton on ship in the harbor at Batan ? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. Then to the price of the coal used,by the Govern¬ 
ment at Manila, at the ice plant, etc., must of necessity be added the 
cost of transportation from the harbor of Batan to Manila? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. What is that a ton? 

Lieutenant Wigmore. In my report I figured that at $1.25 a ton, 
and I allowed for transportation to Manila about 60,000 tons out of 
a total consumption of 200,000 tons. 

The Chairman. The remainder to be taken from the docks at 
Batan by ships? 

Lieutenant Wigmore. Yes, sir; by transports and coast-guard ships. 

The Chairm \n. That belong to the Government? 

Lieutenant Wigmore. Yes, sir. That saves us three or four hun¬ 
dred thousand dollars a year. 

The Chairman. A year? 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. About 60,000 tons would go to Manila ? What Gov¬ 
ernment use could be made of that amount of coal? 

Lieutenant Wigmore. The United States Government’s use for it 
would be for small launches and small transports that do not come 
over those southern routes. 

Mr. Rucker. For Government consumption? 

Lieutenant Wigmore. Yes, sir; and for such vessels of the Phil¬ 
ippine government as do not come over that route, and for the ice 
plant and other uses in Manila. 

Mr. Rucker. Is this a project for furnishing coal more cheaply to 
the people there? 


180 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


Lieutenant Wigmore. No, sir. The ice plant is under the Philip¬ 
pine government. 

The Chairman. The sale of coal under this proposed contract 
with lessees would be limited to the Government for governmental 
purposes—the Government of the United States and the government 
of the Philippine Islands. 

Mr. Puqker. Then they charge another price to the people? 

Lieutenant Wigmore. There is no limit to this charge; no, sir. 

Mr. Pucker. Then the people would not be benefited ? 

Lieutenant Wigmore. They would, because this coal would have to 
be sold cheaper than other coal. 

Mr. Pucker. Would not our tariff keep the other coal out? 

The Chairman. There is a tariff on coal, is there ? 

Lieutenant Wigmore. A tariff of 25 cents. 

Mr. Pucker. That tariff would keep it out, would it not? 

Lieutenant Wigmore. They would reduce their prices. In order 
to keep competition out They would have to do it. 

Mr. Pucker. When competition could be kept out by the tariff 
they would not have to do it. 

Lieutenant Wigmore. The foreign coal operators would not like to 
lose that market without a struggle. 

The Chairman. There is a tariff over there now ? 

Lieutenant Wigmore. Twenty-five cents a ton. 

The Chairman. And they would have to pay that duty and in 
order to get that market would have to undersell the other coal com¬ 
ing into the islands from Japan and Australia ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Pucker. Our tariff applies to the Philippine Islands, does it 
not? 

The Chairman. No. 

Mr. Pucker. Well, that is a hopeful condition. I thought it did. 

Mr. Crumpacker. They have a customs system of their own in the 
archipelago. 

Mr. Pucker. I thought our tariff was extended to the Philippines. 

Mr. Jones. It does, so far as products of the Philippine Islands 
coming into the United States are concerned, but nothing further than 
that. 

Mr. Rucker. Then my question has no bearing in connection with 
the testimony. 

The Chairman. Are there any further questions ? 

Mr. Crumpacker. I do not know that it is necessary to ask this 
question. I had some doubt—I do not know that I can say “ doubt ” 
either—about the propriety of conferring this authority to lease for 
a term of years a coal property of this magnitude without any restric¬ 
tion or limitation. Perhaps that is a matter that would come up in 
committee. 

The Chairman. I think myself that there should be some condi¬ 
tions as to that. 

Mr. Crumpacker. That will have to be considered among ourselves. 

Mr. Kinkaid. Are there no private parties undertaking to develop 
coal mines in the archipelago on a considerable scale? 

Lieutenant Wigmore. No, sir; they never have. The Spaniards 
have put in several thousands of pesos at different times, but they 
have never succeeded in starting an enterprise. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 181 

. Mr. Kinkaid. Are there any immediate prospects of private par¬ 
ties undertaking mining there ? 

Lieutenant Wigmore. So far as I know there is nobody contem¬ 
plating this, unless it be the railroad people. The railroad people 
going into Cebu may be contemplating it. There are several fields 
in which they could go into it. 

Mr. Kinkaid. What railroad enterprise ? 

Lieutenant Wigmore. I think Mr. Swift and his company got the 
contract for the Cebu railroads. 

Mr. Kinkaid. That is some hundreds of miles from Batan? 

Lieutenant Wigmore. Yes; but so far they have done nothing 
about it. 

Mr. Kinkaid. Is it the opinion of those who have been represent¬ 
ing the Government in the investigation of the coal fields in Batan, 
in your own judgment, that it would serve the interests of the Gov¬ 
ernment for it to take hold of this proposition and develop it by 
taking up this option ? 

Lieutenant Wigmore. Yes, sir. There are three points in view. 
The first is the fact that we will be saving a large amount annually 
on the present expenditure for coal; second, that we will have a sup¬ 
ply of coal in war times, and, third, that it will be of great benefit to 
the government of the Philippines. 

The Chairman. I do not think that Judge Kinkaid understands 
the purport of your testimony. His question is, Do you think it 
.wise to adopt this proposition and have the Government develop the 
coal fields ? There is no proposition to have the Government develop 
the coal fields. 

Lieutenant Wigmore. Oh, no, sir! We do not intend to develop 
the coal fields ourselves. We have offers from some San Francisco 
people to go in and work these fields if we will give them a lease such 
as is embodied in this bill. 

Mr. Kinkaid. What does coal cost in Manila? 

Lieutenant Wigmore. About $5 a ton, on an average. 

Mr. Kinkaid. And it would cost less than one-half that if we 
got it from Batan, in accordance with the provisions of this bill ? 

Lieutenant Wigmore. If we got it at the wharf it would be less 
than one-half that; yes, sir. 

Mr. Kinkaid. Do you mean that it costs the Philippine government 
$5 per ton ? 

Lieutenant Wigmore. No, sir. It costs the United States and the 
Philippine governments. 

Mr. Kinkaid. Is the cost the same to the Government and the 
people ? 

Lieutenant Wigmore. Practically so; yes, sir. 

Mr. Jones. The cost to the United States Government now for the 
coal which it is using in its war ships is twice that, is it not? 

Lieutenant Wigmore. Twice that; yes, sir. The navy coal costs 
them between $7 and $10 per ton. Five dollars is the price of the 
coal that the United States and Philippine governments use there. 
It is Japanese and Australian coal. 

Mr. Rucker. I believe you answered this same question before, but 
I am not clear about it. As I understand, the purpose of this bill 
is to authorize the Government of the United States to close out cer¬ 
tain options or contracts that we have made under the direction, 


182 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

probably, of the Secretary of War, with parties owning these coal 
rights on the island of Batan, and to pay those owners $50,000 out of 
the United States Treasury for those coal lands. 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. And then this bill would authorize the leasing of 
those coal lands to some company for a period of fifty years, upon a 
contract being entered into to furnish the Government its supply of 
coal from those mines at cost price and 10 per cent added; and then 
you said to Judge Kinkaid that you thought no private individual 
would undertake the option. 

Lieutenant Wigmore. No, sir. 

Mr. Jones. He said that no private concern had done it. 

Mr. Rucker. Then I will ask you the question direct. Why is it 
not more feasible and practical for private interests to take those 
options and operate those mines themselves ? 

Lieutenant Wigmore. In the first place, they can not get those op¬ 
tions at the price we have them. We had them before the fields were 
investigated, and did the investigating ourselves. 

Mr. Rucker. And yet the Government can not turn the option over 
to anybody they may see fit, but they must buy it themselves ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. Was that provision put in the contract on the part 
of the Government, or was it demanded by the owners? 

Lieutenant Wigmore. No mention whatever was made of it, and 
from the fact that it does not appear in there we can not do it. 

Mr. Rucker. Upon what do you base your conclusion that the own¬ 
ers would not be willing to have the Government turn the option 
over to any other parties ? 

Lieutenant Wigmore. Because at the time I left I had a very hard 
time persuading the owners to extend the option for eight months. 
They showed me letters from an English firm who contemplated 
going in there in case the Government dropped this matter, giving 
them an interest of $300,000. 

Mr. Rucker. Something more advantageous to them than this 
proposition? Notwithstanding the fact that the option had expired, 
or was about to expire, and that when it expired they could make a 
better deal with the English parties- 

Lieutenant Wigmore. Except that they would get cash from the 
Government. They wanted cash. 

Mr. Rucker. So that cash is what they want ? If they want cash, 
would they not take cash from some other persons rather than from 
the United States Government ? 

Lieutenant Wigmore. I rather doubt it, now that they know the 
value of these properties. They did not know it at the time I left, 
except that I told them that the Government would take the land off 
their hands. 

The Chairman. You made a two-years’ investigation with diamond 
drills, boring here and there ? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. It is your impression, from actual borings made, 
that the island of Batan, or at least half of it, is a coal field, and the 
outcrops in the other half indicate that the wh/ole island is practically 
a coal field? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 183 

Lieutenant Wigmore. Yes, sir. 

The Chairman. And these Spaniards own claims which prevent 
the people who own back of their claims from having anything like 
cheap access to the harbor? 

Lieutenant Wigmore. Yes, sir. 

The Chairman. And in order to get to the harbor it would neces¬ 
sitate either very expensive railroad construction over the mountains 
or expensive tunneling? 

Lieutenant Wigmore. Unless we go in where they have their claims. 

The Chairman. Yes; unless we can go in where they have their 
claims. 

Mr. Rucker. I understood you to say, when you testified before the 
committee on a former occasion, that private individuals would not 
take this option if they could and open up those mines. 

Lieutenant Wigmore. I do not think they would. 

Mr. Rucker. For what reason ? 

Lieutenant Wigmore. I think that, in the first place, American 
capital would rather stay at home, unless they get some advanta¬ 
geous investment to put their money into first of all. 

Mr. Rucker. But American capital is willing to go there and ex¬ 
pend whatever is necessary to open up those mines. 

Lieutenant Wigmore. After they have a certain sale of their prod¬ 
uct secured to them, knowing that we are there and would take our 
supply from them. 

Mr. Rucker. As the Government would get its supply from these 
fields, which would amount to 200,000 or 1,000,000 tons a year, I can 
not understand why it would not be just as safe to private parties 
and just as good an investment on their part to take up the options. 

Lieutenant Wigmore. It would seem so, but when you advance a 
proposition like that, it seems that they hold back about going into 
an uncertain investment. 

Mr. Rucker. They know that the Government must have coal. 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. And one of the inducements for capital to develop 
these mines is that the Government would buy its supply there. The 
Government has to have the coal. 

Lieutenant Wigmore. But that did not seem to change the opinion 
of the people with whom we talked. 

Mr. Rucker. The people who are contemplating taking these leases 
and mining the coal want the Government to stick in $50,000. 

Lieutenant Wigmore. They have no interest in going out there and 
bargaining with those Spaniards and making an investigation of 
their own and going in on the probability that the Government would 
take the coal. That is the idea that they have given to me. They 
want to secure the Government’s consumption. 

Mr. Rucker. It seems to me that they would have absolute con¬ 
fidence and faith in the Government taking the coal at that reduced 
rate. 

Lieutenant Wigmore. It would appear that they would. 

Mr. Crumpacker. Do you know when this contract was made be¬ 
tween the Government and the owners of this coal property? How 
long ago? 

Lieutenant Wigmore. It went into effect on the 11th of June, 1903. 


184 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Crumpacker. And having made the contract by which the 
Government secured the option to buy this coal property for $50,000, 
then an investigation was made to ascertain its value ? 

Lieutenant Wigmore. Yes, sir. 

Mr. Crumpacker. And having made that investigation, and the 
result of it having become public, it is not likely that the owners 
would sell the property at the same price if they could get rid of the 
option. 

Mr. Rucker. After all these developments were made and ascer¬ 
tainments secured, after the value of the coal fields was apparent to 
those owners, did they extend the expired option to the Government 
which is now in effect? 

Lieutenant Wigmore. They extended it for eight months. I had 
to go over the matter very often with them to get them to do this. 
They made the extension when they knew it was a pretty good field, 
but they had not then seen my papers. They knew the general fact 
that coal was there, and that we had mined 400 tons, and the coal 
had been received very favorably. It is entirely a question of cash 
with them, and they were sure to get cash if we took the option and 
purchased the property. 

Mr. Rucker. I imagine that they must have had an idea that the 
coal was there, because they had an option of $50,000 upon the prop¬ 
erty before the investigation was made. 

Lieutenant Wigmore. Oh, yes. They knew that coal was there. 

Mr. Rucker. Possibly we assumed that they knew nothing about 
it when they required an option of $50,000. 

Lieutenant Wigmore. No. They had been taking coal out of 
there. 

Mr. Crumpacker. If this property should be owned and operated 
by private enterprise, the Government would be entirely at the mercy 
of the owners of the mines down there for the coal supply. 

Lieutenant Wigmore. Exactly; just as they are now. 

Mr. Crumpacker. One of the chief benefits that would be derived 
from this contract would be that if the Government buys the prop¬ 
erty in and makes a lease for it, it can incorporate terms in such lease 
which will protect it against impossible or extortionate prices. 

Lieutenant Wigmore. Yes, sir; that is the whole object of the 
Government acquiring this property, so that it can by contract protect 
itself and save on the annual expenditure for coal. 

Mr. Crumpacker. That is the reason there should be Government 
control instead of individual control? 

Lieutenant Wigmore. Yes, sir. 

Mr. Rucker. The fact that I was trying to develop is this: That 
there is no reason in my mind why the Government could not turn the 
option over to capitalists. 

Lieutenant Wigmore. If we could do that it would be a different 
proposition. The option is not transferable. I took that matter up 
with the Judge-Advocate-General, and he said that this could not be 
done. 

Mr. Rucker. When a Japanese undertakes to dictate terms to the 
United States Government, I am against the proposition. 

Mr. Smith. This is not a Japanese proposition. It is a Spanish 

one. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 185 

Mr. Rucker. I understood that it was a Japanese. Well, I have 
more respect for the Japanese than the Spaniards, and would rather 
have a Japanese get the drop on me than a Spaniard. 

The Chairman. They have had those claims since 1890 and have 
been blocking access to the harbor. 

Lieutenant Wigmore. Yes, sir. 

Mr. Kinkaid. Mr. Chairman, will there be any vote on this bill this 
morning ? 

The Chairman. No. I wish to close the testimony to-day, and 
then have the committee take up the bill for consideration at the next 
meeting. 


59th Congress, ) HOUSE OF REPRESENTATIVES, j Report 
1st Session . j | No, 1182. 


PURCHASE OF CERTAIN COAL CLAIMS IN THE PHILIP¬ 
PINE ISLANDS. 


Febhuaky 12, 1906. —Committed to the Committee of the Whole House on the state 
of the Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 
submitted the following 

REPORT. 

[To accompany H. R. 12864.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 12864) to provide for the purchase of certain coal lands in the 
Philippine Islands, and to authorize the lease of same and of the Batan 
Military Reservation, for the purpose of securing a local coal supply 
to the United States Government in the Philippine Islands, beg leave 
to submit the following report and recommend that said bill do pass 
with the following amendment, to wit: 

Amend the title. 

Strike out all of section 2. 

So that said bill when amended will read as follows, to wit: 

A BILL to provide for the purchase of certain coal claims in the island of Batan, in the Philippine 

Islands, and for the purpose of securing a local coal supply to the Government of the United States 

and to the government of the Philippine Islands. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That the Secretary of War be, and he is hereby, authorized to 
purchase the coal claims owned by Messrs. Munoz and Villanueva, lying on the 
island of Batan, Philippine Islands, and upon which the War Department now holds 
an option; and to provide for the purchase of said claims the sum of fifty thousand 
dollars is hereby appropriated, out of any money in the Treasury not otherwise 
appropriated; and the above sum is made immediately available in order that pur¬ 
chase may be made before the said option expires, to wit, before March first, nine¬ 
teen hundred and six. 

The Government of the United States and the government of the 
Philippine Islands are now obliged to pay practically $5 a ton, on the 
average, for coal used by them in the Philippine Islands. The total 
consumption is about 200,000 tons, of which, approximately, 60,000 
tons go to the city of Manila alone. The two governments use coal in 
launches, coast-guard boats, small transports, and in the ice plant and 
other buildings at Manila, etc. 

186 







PURCHASE OF COAL CLAIMS IN THE PHILIPPINE ISLANDS. 187 

At present coal in Manila costs the United States Government and 
the Philippine government about $5 per ton. This coal comes either 
from Japan or from Australia. 

The object of the pending bill is to authorize the Government of the 
United States to close out an option which it has on certain claims held 
by Spaniards on coal properties on the island of Batan. The bill 
appropriates $50,000 out of the Treasury of the United States to pay 
the owners of these claims in accordance with the terms of the option 
now held by the Government, the ultimate purpose being to secure 
coal for the two Governments at a much lower price than they are 
now obliged to pay, and thereby effect an annual saving of from four 
to five hundred thousand dollars. 

The island of Batan is about 5 by 10 miles in dimension, and by 
water route is 450 miles from Manila. In 1903 the Government 
secured the above-mentioned option, and then detailed Lieut. H. L. 
Wigmore, Corps of Engineers, to make a thorough investigation of 
the island with a view to determining the extent and value of its coal 
fields. This officer devoted practically two years to making a thor¬ 
ough investigation with drills and other apparatus and in the actual 
mining of coal. In his testimony before your committee, and also in 
his official report, the lieutenant declares that with diamond drills he 
found the Coal Measures were two in number, separated by strata of 
limestone, and that in the upper set of Measures there was from 6 to 
10 feet of coal, and in the lower set from 20 to 25 feet of coal, as 
revealed by the drill holes. He says that he found the coal abundant 
in quantity and very clean. In the last particular it differs very 
essentially from the dirty Japanese coal. The coal runs uniform in 
quality, the seams extending from the western to the eastern end 
diagonally across the island. 

The island is one ridge sloping both ways to the shore. The high¬ 
est outcrop of coal is about 500 feet above sea level on the south slope, 
and the drills revealed coal measures to at least 300 feet below sea level. 
Lieutenant Wigmore says that he drilled thoroughly over only about 
one half of the island, but that he has no doubt, from his investigations 
in the other half and the outcroppings there, that practically the whole 
island is underlaid with coal. The testimony shows that there is any¬ 
where from one hundred to two hundred years’ supply of coal, reck¬ 
oning the consumption at 200,000 tons per annum. 

A proposition has been made to the Government, in the event of its 
concluding the purchase of this option, to enter into a lease for the 
working of the mines, whereby the lessee is to guarantee to the Gov¬ 
ernment of the United States and to the Philippine government such 
coal as they may respectively need, at an advance of only .10 per cent 
above the actual cost. The testimony before your committee shows 
that this coal could be mined and put on board ship in the harbor at 
Batan at an outside cost of $2 per ton. Adding 10 per cent to this 
would increase the cost to $2.20 per ton on board ship at that harbor. 
The testimony further shows that freight could probably be secured 
at about the rate of $1.25 a ton for the 60,000 tons of coal to be trans¬ 
ported to Manila. The remaining 140,000 tons of the total consump¬ 
tion would be taken by Government transports and coast-guard ships 
from the docks at Batan, thus effecting an aggregate annual saving of 
from three to four hundred thousand dollars. 


188 PURCHASE OB' COAL CLAIMS IN THE PHILIPPINE ISLANDS. 

There is only one harbor in the island of Batan, but this is one of 
the finest in the Philippines, ships drawing 32 feet of water being able 
to go within 100 yards of the shore line. The harbor is absolutely 
landlocked, so that a vessel could coal at any time day or night. 
Moreover, the island is only about 50 miles from the line of travel of 
vessels running from Honolulu and Guam through the Straits of San 
Bernardino to Manila. 

The Spanish claims in question were secured in 1890, eight years or 
more before the American occupation. They cover about 300 acres 
and are located upon the lower end of the island, on the harbor. The 
Government of the United States owns all of the coal lands back of 
these Spanish claims, but the latter are so located that it will be impos¬ 
sible, without going to very great expense in the construction of miles 
of railway over the mountains and expensive tunneling, to bring coal 
from the land in the interior to the harbor. If the Government owned 
the Spanish claims and mines were opened upon them the distance 
would be only from 200 to 400 yards from the mouth of the mines to 
the ship. 

The testimony before your committee shows that there is no doubt 
as to the validity of the Spanish claims. Concerning that, Secretary 
Taft says: 

Of course there are in the island a great many unfounded mining claims, but we 
examined the ones in question (these Spanish claims) with great care, because if we 
could have declared them invalid, and found that the present claimants could have 
been justly dispossessed, we should certainly have done so. 

Your committee are of the opinion that as a business proposition 
the purchase of these claims is a good one for the Government. 

Section 2 of the original bill provided for the leasing of these coal 
lands on certain conditions therein named. 

Your committee are of the opinion that legislation of this kind had 
better be enacted in a separate measure, and therefore have reported 
the bill with section 2 stricken out. 

Your committee earnestly recommend the passage of the amended 
bill without delay, as the option in question expires on the 1st of 
March next. 


[Public —No. 26.] 

An Act To provide for the purchase of certain coal claims in the 
island of Batan in the Philippine Islands. 

Beit enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled. That the Secretary of War 
be, and he is hereby, authorized to purchase the coal claims owned by 
Messrs. Munoz and Villanueva, lying on the island of Batan, Philip¬ 
pine Islands, and upon which the War Department now holds an 
option; and to provide for the purchase of said claims the sum of fifty 
thousand dollars is hereby appropriated out of any money in the 
Treasury not otherwise appropriated; and the above sum is made 
immediately available in order that purchase may be made before the 
said option expires, to wit, before March first, nineteen hundred and 
six. 

Approved, February 26, 1906. 

189 


NEUTRALIZATION OF THE PHILIPPINE ISLANDS. 


Committee on Insular Affairs, 

House of Representatives, 

Saturday, April 7, 1906. 

The Committee on Insular Affairs met at 10 o’clock a. m., Hon. 
Henry Allen Cooper in the chair. 

Mr. McCall. Mr. Chairman and gentlemen of the committee, the 
hearing is upon the joint resolution introduced by me for the neutral¬ 
ization of the Philippine Islands. Perhaps I had better read the 
resolution. 

JOINT RESOLUTION For the neutralization of the Philippine Islands 

Whereas it is frequently urged as a reason for refusing their independence 
to the Philippine Islands that some other nation would take the islands if the 
United States abandoned them; and 

Whereas this danger can be removed by an agreement between the United 
States and the great nations of Europe and Asia whereby the independence of 
the Philippine Islands shall be assured and they shall be regarded as neutral 
territory not open to the occupation of any other nation, as the independence of 
Switzerland has long been secured in Europe; and 

Whereas fidelity to the fundamental principles of the American Government 
requires that said Government should aim to secure and safeguard the inde¬ 
pendence of said islands: Now, therefore, be it 

Resolved by the Senate and House of Representatives of the United States of 
America in Congress assembled, That the President is requested to open nego¬ 
tiations with the other nations for the purpose of securing an agreement with 
them for the neutralization of the Philippine Islands and the recognition of 
their independence whenever the same shall be granted to them by the United 
States. 

You will all recall the arguments that were urged in behalf of the 
annexation of the Philippine Islands. There were a great variety 
of those arguments, but the original advocates and defenders of 
annexation, after eight years of experience, seem to have gotten to¬ 
gether and have agreed to impute that event to the inscrutable de¬ 
signs of Providence. If those islands had come into our possession 
prior to the year 1898, and after the close of the civil war, the states¬ 
men of this country would have been sleepless until they had devised 
some permanent status for them consistent with the fundamental 
principles of the American Government. In my opinion, that ques¬ 
tion is no less important to-day than it would have been in the times 
to which I have referred. And this committee has had imposed upon 
it the finding of a solution of this most important question—a ques¬ 
tion of great practical moment—and if the ideal can be separated 
from the practical, a question of transcendent importance from the 
ideal standpoint. 

Instead of calling a multitude of gentlemen here to-day—men of 
very high character—I have thought it best to have the case substan¬ 
tially presented by one man, and, accordingly, I have invited the 
gentleman who is here to address the committee. I do not know of 
anybody who is better fitted, or, I will say, so well fitted, as he is to 
present this question. He is one of the leaders of the Massachusetts 
190 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 191 

bar; he is thoroughly conversant with the chapters of our history 
relating to this question, and, better than all, I think he has the 
spirit which will give weight and which will fuse what he says. 

A good many years ago, for one so young as he is, he had an ex¬ 
tensive experience in affairs at this capital. He was in the Hall of 
the House of Representatives when, amid breathless silence, it passed 
the resolution of impeachment against Andrew Johnson. Later he 
was on the floor of the Senate. He was the private secretary of 
Charles Sumner, one of the greatest figures in American history, 
and he knew intimately Sumner’s great compatriots, Trumbull, 
Seward, Morton, Reverdy Johnson, and he has kept alive the spirit 
of that historical age. I now ask the committee to listen to Mr. Moor- 
field Storey, of Boston. 

STATEMENT OF HON. MOORFIELD STOREY, OF BOSTON, MASS. 

Mr. Storey. It would have been easy, under certain circumstances, 
to bring here a great many gentlemen to make short speeches in 
favor of this resolution, but it would have meant calling a great many 
busy men from different parts of the country at a great deal of 
inconvenience and expense to them, and so Mr. McCall has thought 
it better to place that responsibility upon one man, and the responsi¬ 
bility has fallen upon me. I could wish that it had fallen upon some¬ 
body better qualified, but I shall endeavor to do the best that I can. 

I fancy that there are now very few citizens of America who do 
not recognize that the Philippine Islands present to us a most 
embarrassing problem. Some seven or eight millions of poor, dis¬ 
contented, unhappy people are a serious problem for any government 
to deal with, especially where the government is as remote from the 
scene of action as is the United States from the Philippine Islands. 

I do not propose to discuss who is responsible for the existing con¬ 
ditions. That is a matter of history, and it involves a good many 
disagreeable and partisan arguments. The present is enough, and it 
is clear that the proper solution of the questions that now present 
themselves is difficult enough to require all the time and all the 
thought that we can spare for the Philippine Islands. 

As Mr. McCall has pointed out, this resolution is aimed at one 
reason for retaining our control of the islands! When the islands 
were taken the argument was that it was necessary to do so in order 
to prevent them from being taken by some other power. That argu¬ 
ment did not impress all of us, but it impressed a great many people 
of this country very much. And we see it constantly brought for¬ 
ward now as a reason for retaining the islands. We can not afford 
to let them go because some other power would take them. 

This resolution aims to remove that obstacle from our path, and the 
feeling which prompts it is that we should be at liberty to deal with 
the Philippine Islands as we think proper. The question of their 
government; the question whether they should receive their inde¬ 
pendence or not is a question between us and the Filipinos, and it is 
not a question which legitimately interests any foreign power. In 
deciding that question we should be able to deal with it as we think 
best. If we conclude to give the Filipinos independence, we should 
be in a position to do so when we think proper, but not to have our 


192 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


judgment coerced by the fact that some foreign nation is liable to 
interfere if we decide in a certain way. This, therefore, is a resolu¬ 
tion which is intended to free the hands of the United States and 
leaves in its entire control the situation. 

That it is feasible to obtain such an agreement is, I think, hardly 
doubtful. In the first place, if we ask the powers of the world to 
make this agreement with us, we are not asking them to give us any¬ 
thing. The Philippine Islands in their eyes now belong to us. They 
are not subjects for foreign aggression. To interfere with them 
means war with us, and that is what no foreign power is at present 
seeking. Therefore when we ask them to agree, if we decide that it 
is proper to give the Filipinos their independence, they will keep 
their hands off. We are asking them to give nothing. 

The request, if made now, is made at a peculiarly favorable time. 
There never was in the history of the world a time when the friend¬ 
ship of the United States was so much desired by everybody as it is 
at this moment. There are many of us who come down from a 
former generation who remember the time during the civil war when 
the relations between this country and England, this country and 
France, this country and Germany, were strained; when we felt that 
we were constantly living under the shadow of their interference in 
our affairs; when the greatest service that could be rendered was to 
persuade them to keep their hands off; and the feeling in this 
country against those nations was extremely bitter. But to-day 
Japan certainly wishes to cooperate with us, and she recognizes the 
friendship that we have shown her in the recent war with Russia. 
Russia would be anxious to be our friend if possible, and a reformed 
Russia will find us warmly her friend. Germany has shown her de¬ 
sire to be friendly with us by her recent action about the tariff. 
France and England are certainly each anxious to preserve their 
present relations with us; and if this country were to ask them simply 
to make this agreement, I am perfectly certain that there would be 
no objection. If we said that we wanted this thing we should get it. 

Moreover, what we are dealing with, that which we are afraid of, 
is not so much the anxiety on the part of any foreign nation to take 
the Philippine Islands because it wants the islands as it is the fear 
that one nation may take them in order to prevent another nation 
from taking them. ^England once owned and controlled these islands, 
but she let them go voluntarily. Spain owned and controlled them, 
and, I fancy, was very glad to get rid of them. Certainly the figures 
show that her prosperity since we have had her colonies is much 
greater than when she had them. Our own experience with them 
has not been such as to make other nations regard them as a peculiarly 
tempting morsel. Probably if England should be assured that Ger¬ 
many would not get them, and Germany that France would not get 
them, and France that no other foreign power would get them they 
would be glad to agree that those islands should become independent. 
They would be protected by an international agreement against their 
being absorbed by any rival. 

This result is in accordance with perfectly established diplomatic 
precedents. The independence of Holland clear back to the treaty 
of Utrecht has been protected by international agreement. The inde¬ 
pendence of Belgium was guaranteed in 1839, the independence of 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 198 

Switzerland in 1818, and I could give you a long list of similar 
agreements whereby certain small powers have been made independ¬ 
ent, and by the consent of their stronger neighbors have been pro¬ 
tected against aggression. If, therefore, we, the great Republic of 
the West, feel at any time in the future that the time has come when 
it is worth while to let the small republic start in the East, we wish 
\o feel that we shall be able to do so. And the agreement that this 
resolution suggests is simply an agreement that if we want to let our 
child try to walk alone these other powers will not step in and knock 
it down. To me the thing seems to be a matter of common sense. It 
assures us freedom in dealing with the most difficult problem that we 
now have before us. It gives us a free hand, and it does not force our 
hanu in any way. It removes one difficulty in our path, and that 
certa.iily is something which we all ought to be glad to 'accomplish. 
And I am unable to see that there should be any objection whatever, 
but objections are stated. 

Mr. Crumpackek. The agreement by the powers for the neutrali¬ 
zation )f the smaller countries of the world are simply to secure their 
independence against foreign aggression. Are there extant now any 
agreem dnts to protect them against domestic incapacity and disorder ? 

Mr. Storey. I fancy not, sir. 

Mr. Orumpacker. I am in sympathy, in a broad way, with this 
proposition. But, in view- of the fact that in the Philippine Archi¬ 
pelago there is no common language, no literature, no common tradi¬ 
tions, and practically no national spirit, do you believe that those 
people could maintain any kind of respectable, independent govern¬ 
ment ? Are you sufficiently well acquainted with the conditions there 
to be &ble to give an opinion upon that question? 

Mr. Storey. Well, sir, if those assertions of yours are all correct— 
which I am not quite prepared to admit—I should none the less say 
that, in my judgment, they are much more competent to govern them¬ 
selves than any other nation is to govern them, and I shall endeavor 
to say something in support of that proposition before I get through. 

Mr. Crumpacker. I would be glad to hear you upon that. 

Mr. Storey. They have no common language, but it seems to me 
that they are better able to understand each other than they are to 
understand us. English has never been a language spoken by any of 
the people of the island, and while their dialects vary very much, the 
same is true of the English dialects, for the people of Cornwall and 
the Scotchmen do not always understand each other, yet they have 
means of communication by which they understand each other very 
much better than they understand Frenchmen. 

So far as national spirit is concerned, it seems to me the Filipinos 
have a very strong national spirit. The testimony of a gentleman 
who is a member of this committee, the testimony of many gentlemen 
who went to the Philippine Islands, the universal testimony of these 
gentlemen is that the Filipinos all desire independence. That is the 
foundation of national spirit, and the capacity for disorder is common 
to human nature. I want to say a few words about that when I come 
to it a little further on in my argument. 

But let us take that very proposition. It is said that Holland and 
Belgium and Switzerland are well-organized countries.that can safely 
be intrusted with their independence, and the Philippines can not. 
This resolution frees our hands. It leaves us free to settle the ques- 


35815—08-13 


194 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

tion when and as we will, but to settle it as we think right, and not to 
hold on to the Philippines when we think it right to let them go, for 
fear that England or Germany or France or some other country may 
take them. We shall be taking advantage of a peculiar situation, 
which will leave us to deal with the islands without fear of foreign 
interference. That is all that this resolution accomplishes. But it 
is said that this thing contemplates their future independence; that 
the passage of this resolution would mean to them, and would mean 
to the world, that ultimately we propose to make them independent. 
Is not that to-day the position of almost everybody in this country ? 

A good many years ago, at the beginning of the business, there 
were people who fancied that this was going to be an extremely profit¬ 
able venture; that the United States had much to gain by taking the 
Philippine Islands. I think that that party has been steadily losing 
membership ever since. The words, “ The Philippines for the Fili¬ 
pinos ” mean, ultimately, their independence. 

The Chairman. I want to call your attention to a passage in the 
report of the Philippine Commission (the Schurman Commission), 
with which probably you are familiar, and to ask your opinion as to 
whether the statement is applicable to present conditions. On page 
175 of their report that Commission say: 

Should our power by any fatality be withdrawn, the Commission believe that 
the government of the Philippines would speedily lapse into anarchy. 

Then a little later they say: 

Only through American occupation, therefore, is the idea of a free, self-gov¬ 
erning, and united Philippine commonwealth at all conceivable. 

And then, speaking of educating the Filipinos, they say: 

Nevertheless, they recognize the indubitable fact that the Filipinos can not 
stand alone. 

Now, if they are in such a condition that our withdrawal would 
result in anarchy, is it now possible for us to state with any degree of 
certainty a day for such withdrawal ? 

Mr. Storey. This resolution does not call for that. 

The Chairman. Is not that a practical question ? 

Mr. Storey. I am not prepared to deal with that question. May I 
ask what is the report from which you have just quoted? 

The Chairman. It is the report of the Schurman Commission. 
They went over there at the direction of President McKinley. It 
must have been in 1900. 

Mr. McCall. Isn’t the report dated ? 

The Chairman. I read from an extract of the report. The Com¬ 
mission was appointed in 1898. The report is at least six years old. 

Mr. Storey. That report was signed by President Schurman ? 

The Chairman. It was signed by President Schurman, Admiral 
Dewey, Charles Denby, and Dean C. Worcester. 

Mr. Storey. Colonel Denby was the gentleman who said that we 
should try the Philippine Islands, and if we found that they would 
not pay, we should let them go. President Schurman, after some ex¬ 
perience in the islands and his experience since, has changed his mind 
and he said not long ago that “ the worst government of the Philip¬ 
pines by themselves would be better than the best government of the 
Filipinos by the United States.” That is a change of mind. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 195 

Admiral Dewey began by saying that the Filipinos were much better 
fitted for self-government than were the Cubans, and I think that his 
mind has been more or less in suspense. General Otis, I think, is the 
man who is responsible more than anybody else for the war. I do 
not think that as a statesman his judgment should control ours. At 
any rate, that was made at the beginning of the period upon which 
we are now looking back. It was made, apparently, on the theory 
that our government there was going to be free from disorder; that 
we were going to secure a peaceful, prosperous community. No one 
can look back upon the six years that have passed without saying that 
this expectation has been very far from realized. 

Now, take up this question of the danger that the Filipinos w T ill 
fight among themselves and show me any free nation, from the begin¬ 
ning of history until now, that has not won its freedom through 
fighting. Take the great Anglo-Saxon race. Take England, and 
go back and see how many wars she has had with Ireland; how many 
wars with Scotland; how many wars of the Roses; how many revo¬ 
lutions like the revolution which cost Charles I his head, and the revo¬ 
lution of 1688. How many fights have occurred before they acquired , 
the liberty they now have ? 

Cross the channel to France and remember the w r ars there—the re¬ 
ligious wars, the wars of the Froude. Remember the disputes cul¬ 
minating in the French revolution; and it was through that revolu¬ 
tion that France obtained the liberty that she now has. And during 
the next one hundred years, how many more revolutions ? The revo¬ 
lution of 1830, the revolution of 1848, the coup d’etat of 1851, down to 
the time of the Commune, it has been a long series of internal dis¬ 
orders, internal contest, internal bloodshed; and the result to-day is 
that France has the strongest government that she has ever had. 

And how is it in Germany? Look at the numerous battles that 
they have had there—their revolutions. Look at Russia to-day, and 
ask yourselves whether those people are not through bloodshed win¬ 
ning their way to freedom. 

Go down to Mexico. In 1848 we left Mexico absolutely shattered. 
We destroyed her government; we destroyed the coherence of the 
people; we left it a prey to factional and internal disorder and abso¬ 
lutely impoverished. That was in 1848—something like fifty-eight 
years ago—and where is Mexico now ? She is one of the most pros¬ 
perous and well-ordered of the nations which lie south of us on this 
continent. 

It was the same way in South America. And I can not help call¬ 
ing your attention to the words of Henry Clay, when he spoke of the 
South American Republics, for which everybody was prophesying 
disorder, in 1822: 

But it is sometimes said that they are too ignorant to admit of the existence 
of free government. * * * I deny the alleged fact of their ignorance. I 

deny the inference from the fact, if it were a fact, that they want capacity for 
free government. * * * I contend that it is to arraign the dispositions of 

the Almighty to suppose that he has created beings incapable of governing them¬ 
selves, and to be trampled on by Kings. Self-government is the natural gov¬ 
ernment of man, and for proof I refer to the aborigines of our own land. 

And President Lincoln put the same argument more at length when 
he said: 

These arguments that are made that the inferior race are to be treated with 
as much allowance as they are capable of enjoying; that as much is to be done 


196 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


for them as their condition will allow—what are these arguments? They are 
the arguments that kings have made for the enslaving of the people in all 
ages of the world. You will find that the arguments of kingcraft were always 
of this class. They always bestrode the necks of the people ; not that they 
wanted to do it, but because the people were better off for being ridden. * * * 
Turn it every way you will, whether it come from the mouth of a king as an 
excuse for enslaving the people of his country, or from the mouth of men of 
one race as a reason for enslaving the men of another race, it is all the same 
old serpent. 


Now, against such statesmen as General Otis, who is a military 
man, and Admiral Dewey, who is a naval officer, I can not help think¬ 
ing that we can place the arguments of Lincoln and Clay, and feel 
that they as statesmen are better and safer guides for the people of 
this country than are the gentlemen who have been referred to. 

But there is another thing to be said on this subject. Take these 
Moro Islanders. They have been governing themselves for a great 
many years. They are said to be the most savage part of the Philip¬ 
pine Islands. They had so much of a government that we made a 
treaty with them which lasted for some years. They went on, so far 
, as appears, without internecine warfare during the existence of that 
treaty. Now, if they are incapable of self-government, how is it 
that this has not happened ? How is it that for three years there was 
peace on these islands and that the first indication of war, bloodshed, 
and slaughter came when troops of the United States went there ? 

The Chairman. There are some practical features of it that need 
discussion. 


Mr. Storey. I was simply addressing myself to your question 
whether the Filipinos are fit to govern themselves. 

The Chairman. I appreciate the force of your argument. 

Mr. Storey. Then you must remember when you say they have no 
literature that the University of Manila is older than the University 
of Harvard. You must remember, also, that they have a large num¬ 
ber of men who were educated at foreign universities. 

The Chairman. Let me say right there, in connection with what 
you said about the treaty with the Moros, that instead of being what 
we call a “ treaty ” it was simply an agreement between the military 
commander and the insurgents, and an agreement with relation to 
the regulation of the practice of human slavery. President McKin¬ 
ley refused to ratify that particular clause in this military agreement, 
but peace, notwithstanding, continued in this province—and this is 
a reply to your question, I think—until such time as our officers un¬ 
dertook to prevent human slavery there, when the trouble began. 

Mr. Rucker. That treaty, I tliink, had its inception in the thought 
that the United States Government wanted the aid of the Moros in 
preserving order there. I think that is true, is it not? 

The Chairman. That possibly had something to do with it. 

Mr. Storey. I think this must be said, that we wanted the Moros 
to keep thgir hands oh' while we were fighting the people in Luzon. 

The Chairman. I think it is agreed, generally speaking, that the 
reason for the outbreaks among the Moros was, in large measure, if 
not entirely, due to our interference with the system of slavery. 

Mr. Storey. I think it largely comes from the fact that we went in 
there and said, “ Now, we are your masters, and you must submit.” 
It was because we undertook to assert our authority over the island 
ihat the trouble broke out. Our purpose may have been entirely 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 197 

benevolent, but there are certain incidents in connection with the 
enforcement of that policy that I am sure we all regret. 

As to whether they are fit for self-government at this moment or 
not, we say to the world, and we say to them, “ We are endeavoring to 
educate and elevate you; we are undertaking to fit you for self- 
government,” or, as the President put it, “ after the manner of the 
really free peoples.” We are saying to them, “ Two generations 
hence—three generations hence—at some time in the indefinite 
future—we expect to let you go.” 

I do not think that anybody of any importance in the United 
States now ventures to say to the people of this country that the object 
of our policy is to keep this people forever subjects, arbitrarily, with¬ 
out hope of freedom, or without hope of becoming citizens of the 
United States. That policy is, I think, no longer advocated. Every 
advocate of our policy now puts it on the ground that some time, if 
they want to, they shall be free. 

Therefore, if you pass this resolution, you say no more to the people 
of the Philippine Islands than you are now saying to them through 
various official channels, and that is that some time they shall be free. 

But even if it means more. If it means, “ We propose to make you 
free soon,” must we shrink from that proposition? Is that a thing 
which strikes an American citizen as something abhorrent; something 
wrong; something not to be tolerated ? 

I hold in my hand here a petition which was presented to the mem¬ 
bers of both political parties by some 7,000 persons. After reciting 
the conditions somewhat at length, they say : 

We do ask in tlie name of the fundamental principles upon which the Ameri¬ 
can Republic was built, and in the name of justice to a foreign people now 
our subjects, that the inhabitants of the Philippine Islands be granted their 
•national independence as soon as, with the maintenance and aid, and under the 
protection of this Government, they can install a free government of their own. 

Now, the men who seek this are the educational, the religious, and 
the moral leaders of this country. There are an indefinite number 
of bishops, and there are almost all the presidents of our colleges. 

Mr. McCall. Is President Schurman in the list, do you know ? 

Mr. Storey. Mr. Schurman is in the list; yes. Mr. Schurman is 
one of the most active men .on the committee. Such men as Wayne 
MacVeagh signed the petition. [Examining the petition.] Yes; 
President Schurman is one of the men who signed it, and it is also 
signed by Grover Cleveland, by the leading lawyers of New York, 
by Archbishop Farley, by Cardinal Gibbons, and others. You can 
hardly najne in this country men whose opinions on almost every 
subject carry greater weight with their fellow-countrymen than the 
gentlemen who signed that petition. They are not men in politics— 
though, perhaps, some of them are. They are the men who represent 
the desire of the American people; and they undoubtedly express 
the feeling that is deep in the hearts of a large majority of the people 
of the United States. 

Mr. Gilbert. Would the passage of this resolution have any effect 
upon the difficulty of preserving order in the Philippines while our 
occupation continues? i 

Mr. Storey. Not a bit. The disorder comes from the fact that 
those people are unhappy and discontented. When we are dealing 


198 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

with children, and tell them that they can never have what they 
want- 

Mr. Gilbert. Would they have the ambition of wanting that which 
they will have ultimately ? 

Mr. Storey. They have the aspiration of any human being, child 
or man, for freedom. You can not check it. You can not rub it 
out. But you can give it to them. They say, “ What is the use of 
being patient? What is the use of trying to get on pleasantly with 
the United States if they give us no hope? ” I believe that if assur¬ 
ance is given to these people that they are to have independence, it 
would do more to make the people happy than any other single step 
that could be taken by the United States. And that is the judgment 
of the men who signed this petition. 

Mr. Gilbert. What do you say of the policy of forcing them to 
study the English language in the schools? 

Mr. Storey. I have always felt that that was a very unwise step. 
As Mr. Dooley once put it: 

“ We’ll larn ye our language because ’tis aisier to larn ye ours than to larn 
oursilves yours.” 

Mr. Gilbert. Would it be forcing a foreign tongue upon them 
without their consent ? 

Mr. Storey. You could easily understand how we should feel in 
this country if the French should come here and make us learn 
French. Not long ago I was in Quebec, which has very nearly be¬ 
come a French province. I saw a statue of Queen Victoria standing 
back in a corner, broken, and statues of Champlain and Frontenac 
were in their places on the front of the Parliament House. I found 
that the papers printed for the two Houses were printed in English 
and French. Some of the members spoke French and some English. 
If an attempt were made to force those people to speak English they 
would be sure to rebel. It is a matter in which the people are vitally 
interested. The trouble between Austria and Hungary, which has 
nearly broken up the Austrian Empire, was in large part caused by 
the attempt to make Hungarian regiments obey commands given in 
German. 

And, after all, what is language but a tool? The point is to get 
the idea. One man gets his ideas by the use of French, another by 
the use of English, and another by the use of Spanish. If you find 
people thoroughly equipped with a tool, why not let them use that 
for what they have got to learn, without forcing them to use a new 
tool ? 

Mr. Parsons. What language should they be taught? 

Mr. Storey. I think the Visayan or the Tagalog language. The 
Tagalog comes nearer being a common language than any other does. 

Mr. Parsons. But, as a matter of fact, we were told when we were 
out there that the fnen of one province could not understand the 
men of another province. For instance, the officers of the con¬ 
stabulary— 

Mr. Rucker. I understand that the same thing is true in the 
United States. I understand that the people in Arizona can not un¬ 
derstand those in New Mexico, and yet we think that these Terri¬ 
tories ought to be joined together. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 199 

Mr. Storey. There are more tribes in the United States than in 
the Visayan Islands, if you take the Indian tribes that were scat¬ 
tered through the territory which we call ours. 

Mr. Parsons. Do you understand that there is much objection in 
the Philippine Islands to the teaching of English in the schools? 

Mr. Storey. I suppose that the Filipinos are glad to learn any¬ 
thing, but I think that there is objection to being forced to learn 
English. 

Mr. Parsons. But do they object to being taught it? 

Mr. Storey. I think they do. I think that the feeling of the peo¬ 
ple is against it. I do not think that the children who go to school 
object. I do not think that we should expect any opposition from 
the children. As matters now stand, English is the tool. The man 
who can speak English gets on better with his neighbors; he gets on 
more easily with his rulers. It helps him to get employment. But 
I fancy that if we should step out, the study of English would not be 
persevered in. 

Now, as I was saying, suppose we were to give the Filipinos inde¬ 
pendence now. Why not? Why are we staying in the Philippines? 
Why not dispassionately, as American citizens, look the facts in the 
face? Why are we there? Is it helping us? Take merely the 
pecuniary balance sheet, and put on one side what it costs us as a 
nation, the hundreds of millions of dollars that we have spent there 
and are going to spend there in fortifications, in keeping soldiers 
there, and all the expenses of imperial government there, and then 
on the other side of the page put the few dollars that some two or 
three citizens may have made. It is a drop against a hogshead. 

Mr. Rucker. What do you think about the patriotic duty that we 
owe forever to maintain those people over there because they fell to 
us as the result of war? 

Mr. Storey. I think that our patriotic duty is a humane duty. 
I think that we owe the same duty to the Philippine Islands that 
we did to Cuba. I am not able to discover any special difference 
between the two cases. The question whether the Cubans were 
fit for self-government was raised before we vacated the island. I 
could cover this table with predictions from statesmen of every sort 
that if we let those people try self-government it woujd be sure to 
fail. We were told from every side that the Cubans were incapable 
of self-government. 

Mr. Kucker. I do not think that there has been any disorder there 
since we gave the Cubans control of the island. 

Mr. Storey. None. The general idea seems to be that the Cubans 
as business men are more prosperous than the Porto Kicans. In one 
case we have been governing the people, and in the other they have 
been governing themselves. Now, there are certain things which are 
essential to government. 

Mr. Parsons. Is not the lack of prosperity in Porto Rico due to 
other causes than that? Is it not due to the destruction of their 
coffee trees by the forces of nature, and not to matters of government ? 

Mr. Storey. If I simply listened to Porto Ricans, I should say 
44 No.” If I listened to the their American governors, I should say 
44 Yes.” There is always that fundamental difference between the 
men who are in power and who are undertaking to satisfy their 
compatriots that they are doing wisely and well, and those people 


200 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

who are on the other side of the fence, and who are not quite so satis¬ 
fied with the government. 

The Chairman. I would like to ask you one question. You said a 
moment ago that the expense in the Philippines was enormous, and 
that there is no profit to us in the retention of the archipelago, etc. 
In that connection, is there anything instructive, by way of argu¬ 
ment, to be found if we refer to England’s experience with Hong¬ 
kong? We are informed by history that for twenty years after 
England took that island there was hardly a year that bills were not 
introduced in the English Parliament for the withdrawal of Eng¬ 
lish power from that island, and the giving of it up, because of the 
expense, and because, as was alleged, that there was nothing by way of 
profit to the English Government. To-day there is nothing that 
could induce the English Government to withdraw from Hongkong. 
On the contrary, instead of its proving a drain on England’s re¬ 
sources, the retention of that island has been of enormous profit for 
England. 

Mr. Storey. I have no doubt whatever that England finds Hong¬ 
kong profitable. I have no doubt that up to* now England has 
found India profitable. But, as I understand it, we are not justify¬ 
ing our retention of the Philippine Islands on the ground that we 
are going to get money out of them. Therefore, England’s success 
in Hongkong and India would not justify us in retaining the Philip¬ 
pines just because we could make money out of them. 

The Chairman. I made the suggestion merely in reply to what you " 
said. 

Mr. Storey. Exactly. I appreciate what you say. I say that the 
Philippines have been a source of expense to us, and no profit. It is 
one thing to take a city like Hongkong, and quite a different thing 
to take an archipelago, containing 8,000,000 of dissatisfied people, 
and expecting to make profit out of them. I fancy that human ex¬ 
perience shows that a storekeeper who tries to ingratiate himself 
with his customers, who is pleasant to them and tries to induce them 
to come in and buy, is more apt to succeed than the one who tries 
to force his customers in with a stick. We have killed a great many 
of our possible customers in the Philippines, and that certainly has 
hurt our trade with the Philippine people. 

I am tempted, since you have put it to me, to deal with India here. 
Our people have contended for a great many years that if England 
has succeeded in India we can succeed in the Philippine Islands. 
There are a few essential differences. But in the first place let me 
take up the question of success. If you ask the English if they have 
succeeded in India, they say, “ Yes; ours has been a marvelous suc¬ 
cess.” If you ask the Indian people, you get a very different idea. 
England has been steadily draining from India for a century or 
more that which has made England rich. And just as in proportion 
it has made England rich it has made India poor. I have here two 
maps [indicating]. That one illustrates the famine area during the 
first year of the nineteenth century. That [indicating] illustrates 
the famine area in the last famine a few years ago. India is being 
slowly starved to death for the profit of England. There have been 
more deaths from famine in India within twenty-five years than 
there have been deaths by war the world over in one hundred and 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 201 

seven years, including the bloodshed of all the Napoleonic wars and 
our own civil war. That large black circle [indicating] represents 
the deaths by famine in India in the last twenty-five years. That 
little square [indicating] represents the deaths by war in one hundred 
and seven years. 

Mr. Gilbert. What connection is there between the famine in India 
and England’s occupation? 

Mr. Storey. The fact is that England found comparatively few 
people who were starving, and every year that she has been in India 
the area of starvation has been increasing. She has been, and is, 
draining India of her wealth, and in 1900 the annual income of the 
Indian people was £1 per head on an average. Mr. Digby tells us 
that the deaths by war in the whole world during one hundred and 
seven years, from 1793 to 1900, have been about 5,000,000, while the 
deaths from famine in India alone during ten years, from 1891 to 
1900, have been 19,000,000. This horror is progressive, and con¬ 
stantly increases. 

During the first quarter of the nineteenth century there were in 
India five famines, costing perhaps 1,000,000 lives; in the second 
quarter there were two, causing half as great a mortality; in the third 
quarter there were six, causing 5,000,000 deaths; and in the last quar¬ 
ter there were eighteen, and it is estimated that 26,000,000 people died 
of starvation. “ In 1880,” said Sir William Hunter, “ there remain 
40,000,000 people who go through life on insufficient food.” In 1901 
an Indian publicist wrote: “For nearly fifteen years there has been 
a continuous famine in India, owing to high prices.” The average 
duration of life in England is about forty years; in India it is 
twenty-three. It is not lack of food, but of money to buy it. There 
has always been food enough in India. England spent in trying 
to subjugate the Boers, in one year, a great deal more money than 
enough to ha.ve fed every mouth in India during the same period of 
time, as we are told. 

The Chairman. In that connection, is it your idea that the monop¬ 
oly of English corporations is responsible for that condition ? 

Mr. Storey. Here is the condition: The Indian administrator is 
prone to claim that the Indians are lightly taxed. So they are, if 
the rate per head is taken; but the reverse is true if the proportion 
of tax to property is considered. Applying this test, it would seem 
that the Indian taxpayer pays a percentage four times as great as 
the Scotch and three times as great as the English subject of the 
Crown, yet a few years ago it was stated in Parliament that the 
income tax in India yielded one-sixtieth as much for each million 
people as in England; and the speaker added: “ If this is not con¬ 
clusive of the poverty of the people, nothing will satisfy the most 
exacting mind.” 

The accumulated wealth of India in the days of Warren Hastings 
was carried away by Englishmen. Now her income is drained to 
England to pay the interest on English investments in railroads and 
public works and the expenses of the English administration. This 
drain is said to be now some £30,000,000 a year. As Mill said in his 
History of India: 

It is an extraction of the lifeblood from the veins of national industry, which 
no subsequent introduction of nourishment is furnished to restore. 


202 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

And as Lord Salisbury said: 

As India must be bled, the lancet should be directed to the parts where the 
blood is congested. 

A prosperous country [said one authority], is one in which the great mass of 
the inhabitants are able to procure, with moderate toil, what is necessary for 
living human lives, lives of frugal and assured comfort. * * * But millions 

of peasants in India are struggling to live on half an acre. Their existence is a 
constant struggle with starvation, ending too often in defeat. Their difficulty 
is not to live human lives—lives up to the level of their poor standard of 
comfort—but to live at all, and not die. * * * We may truly say that in 

India, except in the irrigated tracts, famine is chronic, endemic. 

Then they destroy the Indian industries, the rare manufactures 
that were produced nowhere else, and, instead, Englishmen are em¬ 
ploying the Indians in making ordinary cotton cloth in great fac¬ 
tories and putting an end to India’s natural trade. 

Professor Seely, a high English authority, has said of English rule 
in India: 

At best we think of it as a good specimen of a bad political system. We are 
not disposed to be proud of the succession of the Grand Mogul. We doubt 
whether, with all the merits of our administration, the subjects of it are happy. 
We may even doubt whether our rule is preparing them for a happier condition, 
whether it may not be sinking them lower in misery; and we have our mis¬ 
givings that perhaps a genuine Asiatic government, and still more a national 
government springing up out of the Hindu population itself, might, in the long 
run, be more beneficial, because more congenial, though perhaps less civilized, 
than such a foreign unsympathetic government as our own. 

That is the testimony of a man who believes in it. Now, here is 
the testimony of another man—that is, Meredith Townsend, the 
author of “Asia and Europe,” and a man thoroughly familiar with his 
subject. You will find his book on India most instructive, and it is 
not a very long book. He says: 

Beneath the small film of white men who make up the “ Indian Empire ” 
boils- or sleeps away a sea of dark men, incurably hostile, who await with 
patience the day when the ice shall break and the ocean regain its power of 
restless movement under its own laws. As yet there is no sign that the 
British are accomplishing more than the Romans accomplished in Britain; that 
they will spread any permanently successful ideas, or that they will found 
anything whatever. It is still true that, if they departed or were driven out, 
they would leave behind them, as the Romans did in Britain, splendid roads, 
many useless buildings, an increased weakness in the subject “ people,” and a 
memory which in a century of new events would be extinct. 

The chasm betwen the brown man and the white man is unfathomable, has 
existed in all ages, and exists still everywhere. 

And the income of these poor people, the estimated income per 
head, in 1850 was twopence a day; the official estimate in 1882 was 
li pence a day, and in 1900 it was less than three-quarters of a penny 
a day. If you look at the English Empire in India from the Govern¬ 
ment’s standpoint, it is a splendid success, but if you look at it from 
the point of view of the people, whose income has fallen to less than a 
penny a day per head, it is a terrible failure. 

Now, let us look and see what we are doing in the Philippine 
Islands. I have here a table showing what is going on in Balayan, 
Tuy, and Calatagan, in the province of Batangas. 

In 1896 the number of inhabitants in that municipality was 41,308. 
In 1905 it was 13,924. That is a great many people to wipe out. 

Mr. Rucker. What has become of them ? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 203 

Mr. Storey. They have been killed or have died or moved away. 
I do not know what has become of them. The area of cultivated 
land, in hectares, was 19,500 in 1896, and 1,700 in 1905—not 10 
per cent. Products: Rice, 39,020 cavanes in 1896, and 12,500 cavanes 
in 1900; sugar, 520,000 picos in 1896, now 12,300 picos; maize, 110,000 
cavanes in 1896, now 10,000 ca vanes; the oxen then were 10,000, now 
427; the cows then were 3,650, now 80; carabaos, oxen, 4,110 in 1896, 
now 433; carabaos, cows, 1,350 in 1896, now 92; there were 11,000 
hogs then, there are now 2,800; there were 96,000 hens, there are now 
5,000. Consider what a story those figures tell. 

Mr. Rucker. From what source do you get those figures? 

Mr. Storey. I got those figures from a letter which was addressed 
by representatives from that province to Hon. William H. Taft, the 
Secretary of War, on the 26th of August, 1905. 

The Chairman. Pardon me for another interruption there. I do 
not know anything about how T to account for the death of the other 
animals, but it is known that the rinderpest has destroyed the cara¬ 
bao there in vast numbers. I had an interview with Mr. Roxas, who, 
I believe, is a nephew of one of the heaviest landowners in the Philip¬ 
pine Archipelago, and he told me that he had on their plantation 
about 8,000 of these working animals, and that the rinderpest came 
along and killed them so rapidly that it was with great difficulty they 
could be buried. Of the original 8,000 only about 300 survived, I 
believe. 

Mr. Storey. It was a scourge that came there, but I also have no 
doubt that manv of the animals were killed during the war. 

It is very well knowm that war, pestilence, and famine go together. 
And where you are killing and laying waste the country you are 
cutting off their sources of food and you are bringing about a condi¬ 
tion where men are prone to disease. And undoubtedly, if one were 
to deal scientifically with the condition of the Philippines, it would 
be found that the rinderpest was in part due, as almost every famine 
that follows in the train of war is due, to the absence of the productive 
members of society and to the death and infection that war invariably 
causes. 

I am going to talk to you gentlemen very frankly. You are the 
eyes and ears of the only legislative body that the Philippine Islands 
know. Upon you rests the responsibility of governing those people. 

Now, here in the United States we have States varying in numbers 
from 40,000 people, which I believe is the population of Nevada, up 
to about—I do not know how many millions in New York. Everyone 
of those States, no matter how small, every city, every town, has a 
legislature devoted exclusively to the interests of the particular State 
or city, and it is the business of that legislature to be in constant 
touch with the people that it governs and to find out what are their 
wants, a business which the legislators attend to, because these people 
have the power to displace them or retain them at their pleasure. 
The ear of the representative is generally open to the complaints of 
his people. The community knows how to bring to his attention what 
it wants and what it will have. 

Now, gentlemen, let me ask you how much of your time and how 
much of your thought is or can be devoted to the needs of the Phil¬ 
ippine Islands? Consider that you are a legislature. You are here 
representing, in the first place, the citizens of the United States— 


204 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

dealing with the questions that concern them; and that is enough to 
take your time and attention, the best time, the best thought, and the 
best attention that you can all give. How much is left for the Phil¬ 
ippine Islands ? How much do you really know T about w T hat is going 
on in the Philippine Islands ? 

Let me take a single thing, and that is “ reconcentration.” We 
went to war with Spain largely because our consciences were out¬ 
raged by the practice of reconcentration in Cuba. We felt that as a 
civilized people we could not stand by and see those people injured 
in that way. And I remember that President Roosevelt, impatient 
at the delay of President McKinley, is said to have said, “ The steps 
of the White House are slippery with the blood of the reconcen- 
trados.” This illustrates the feeling of the United States on that 
question. 

If anybody had told us then that we should have gone to the Phil¬ 
ippine Islands and applied that practice on a larger scale than it was 
ever applied in Cuba, and with quite as disastrous results—more 
disastrous results than in Cuba—what should we have said? And 
yet that is what we have been doing. General Miles reported in 1903 
that in that year in a single district 400,000 men were given fifteen 
days to gather their property and come into a few towns. Last year 
the population of two or three towns was turned into a field without 
shelter and without food except that which they brought with them. 
They were left to make for themselves such shelter as they could. 
They were left with such food as they could get, with no medical 
attendance, and with such sanitary conditions as are inevitable in 
such circumstances. That is reconcentration under the American 
flag. Whose steps are slippery with the blood of these reconcen- 
trados? The population of Albay (300,000) was subjected to the 
same treatment a year or two ago. Upon whose steps does the blood 
of those people rest ? 

Now, in England,-when they were applying reconcentration in 
South Africa, there was published every month a blue book, which 
stated how many reconcentrado camps there were, how many people 
there were in each-—how many men, how many women, how many 
children, and how many of each class had died the previous month. 
The English people were kept thoroughly informed. And not only 
that, but a list was kept of every piece of private property that was 
destroyed, when it was destroyed, how it was destroyed, and who de¬ 
stroyed it, and for what reason. The people were kept fully in¬ 
formed as to every single thing which went on in South Africa. Do 
the members of this committee know—can they find out—how many 
people have suffered from reconcentration in the Philippine Islands*? 
Ought not the American people to know what is being done there ? 

I instance that merely as a single case, as one thing which clearly 
illustrates how little the American people know as to what is going 
on in those islands, and unless we know the facts how can we o-overn ? 

The great trouble that we are having there is this: Our whole 
policy rests upon the assumption that the Filipinos are inferior and 
ignorant; that they are not fit to be trusted, and that they can not be 
believed. And if that is the attitude of the whole country, can you 
wonder that the soldiers and the civil administrators, the directors 
and representatives of this country who are sent out there, reflect 
that feeling? Is it not perfectly certain that when they come to deal 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 205 

with the Filipinos they let them understand that they are inferior 
and deal with them as such? The Filipinos welcomed us with open 
arms. We were friends; we were deliverers; there was nothing too 
good for us; but in a short time our soldiers were walking along 
the streets, hustling them into the gutter, and speaking of them as 
“ niggers,” and making it perfectly plain to them that we considered 
them our inferiors. 

If you have ever been to a country muster, you know what the 
soldiers do, even in this country. If you have ever been to college, 
you know what the young men do. Young men everywhere, when they 
are relieved from the pressure of public opinion and from the imme¬ 
diate restraint of discipline, are very apt to amuse themselves at the 
expense of anybody who is a little weaker and whom they can safely 
bully. They “ haze ” each other, and they “ haze ” casual strangers. 
We go to the Philippine Islands and take particular pains to let those 
people understand that we consider them inferior, and that attitude 
insures the failure of any attempt on our part to govern the Fili¬ 
pinos. No government in the world can succeed when the governors 
do not believe, in, do not trust, do not sympathize with the people 
that they are governing. You clothe you administrators with arbi¬ 
trary power. The life of the Filipino is substantially at the mercy 
of any officer of the constabulary, and the lives of a great many 
Filipinos have been taken in all sorts of illegal, outrageous, cruel 
ways during these last years, and there is no constitution to defend 
them. 

Now, what is a constitution? Why do we have a constitution in 
this country? The Constitution is a law which is devised to protect 
the Weak and the poor against the strong and the rich, to protect 
ignorance against knowledge, to protect the minority and the indi¬ 
vidual against the majority. We who are sitting here now should 
not feel safe in the enjoyment of our property if there were no con¬ 
stitution between us and the legislators of our own choice, of our 
own natures, of our own blood. There is not a court in this country 
that has not decided year after year that many acts of the legislature 
are not legal. A great debate is now going on in the Senate on a 
question w T hich deals with the constitutional rights of American citi¬ 
zens—their rights under that Constitution which we say is necessary 
to protect us. And yet we say that these seven or eight millions of 
people thousands of miles away from us can be safely trusted to 
two or three Americans, without any constitution to stand between 
them and the arbitrary power of those men. 

If there is any lesson that history teaches, it is that arbitrary 
power of one man or one nation over another is certain to injure the 
man or the nation that exercises it. There is no despot who does 
not steadily go down hill as soon as he is trusted with power. And 
that is the whole secret of government. There is no proposition 
more fundamental than this, that a government which controls 
8,000,000 of people, without a constitution, without adequate super¬ 
vision, without any real knowledge of what is going on in their coun¬ 
try, is certain to fail. 

The Chairman. You say that they have no constitution there. 
The people of the Philippines have, by statute passed by the Con¬ 
gress of the United States, a complete bill of rights, which was 
copied from the Constitution of the United States, with the addition 


206 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


of several provisions from various State constitutions, and this bill 
of rights is as complete as that of any citizen of the United States, 
excepting that it does not give them the right to bear arms nor the 
right of trial by jury. 

Mr. Storey. The law is suspended at the will of the Commission, 
and they have no voice in their own government. 

The Chairman. No; neither the bill of rights nor the statutes 
passed by Congress can be suspended at the will of the Commission. 
Next spring there is to be an election for members of the lower house. 

Mr. Storey. Which will have exactly the power that the lower 
house has in Porto Rico—that is to say, the power to do nothing, the 
power to suggest. Just put it to > rself, sir. 

The Chairman. I do not wish to make any improper interrup¬ 
tions, but I want to get at what are the real facts in the case and look 
at it from all sides. Is it speaking with entire accuracy to say that 
the Congress of the United States has turned over seven or eight mil¬ 
lions of people to the unrestricted, arbitrary power of two or three or 
more Americans? 

Mr. Storey. I think it is, sir. 

The Chairman. When that bill of rights is there, and when they 
have a supreme court and other courts composed largely of Filipino 
judges, and the chief justice of the supreme court and two other mem¬ 
bers of that court are native Filipinos, and Secretary Taft says that 
it is a court which will compare favorably with the supreme court of 
any State in the United States? 

Mr. Storey. But the Secretary is at the same time preparing a bill 
to take the power of appointing these judges from the Philippine 
Commission, because he thinks they should not be trusted with it. 

Mr. Parsons. May I correct that statement ? That is not his 
reason. His reason is because some people there think that the Com¬ 
mission exercises improper control. He thinks it just as well to 
change it, but he does not admit for a moment that there w T as any 
improper control exercised. 

Mr. Rucker. There is some belief, however, that improper control 
has been exercised by the Commission, not by the Secretary, and I 
am very strongly impressed myself with the idea that those complaints 
are well founded. 

The Chairman. It was in sending judges to circuit courts on spe¬ 
cial occasions. 

Mr. Storey. What the Secretary has said is this: 

Speaking from my personal and intimate acquaintance, I know of no case in 
which there has been undue interference with the courts. 

And that is from a very careful statement in a very carefully prepared 
speech. No case can be proven of undue interference. Who is to 
decide what is “ undue interference ? ” There is no denial that there 
has been interference; only it is impossible to prove any case of undue 
interference. The Secretary then goes on to say: 

There is under the present system an opportunity for such interference that, I 
think, can not be denied. 

And therefore he is strongly in favor of giving the President alone 
the power to appoint and remove judges. 

Mr. Storey. You say that Congress has passed a law giving those 
people certain rights, which is so. But the same power that passed 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 207 

that law may repeal it and the power that is called upon to execute it 
suspend it. 

The Chairman. The people of the United States have a right to 
repeal or abrogate the Constitution. 

Mr. Storey. They have, but if they do it is their own act. 

Mr. Rucker. There is no danger of the people amending the Con¬ 
stitution. We are unable to change the present method of the election 
of the Senators. Everybody wants it done, but we can not get it done. 

Mr. Storey. What you say of the Filipino judges is inconsistent 
with the theory that the Filipinos can not govern themselves. Take 
the government of Porto Rico. Suppose it was proposed to establish 
such a government in the State of Wisconsin. Let the people of that 
State elect a lower house, and the governor of New York appoint five 
New Yorkers to act as a senate, in whom the whole executive power 
should be vested, and no act could be passed without their consent. 
Would the people of Wisconsin, because they elected the lower house, 
believe that they had a popular government? 

The Chairman. Let me answer that by saying that Thomas Jef¬ 
ferson, who was one of the greatest believers in the principle of democ¬ 
racy, appointed a commission with greater powers in Louisiana. 

Mr. Storey. For a very short time during the transfer of sove¬ 
reignty. 

The Chairman. For a very short time, I know. 

Mr. Storey. In a few months Louisiana w T as given self-government, 
and I am only asking you to follow Jefferson's example. We have 
had a commission for eight years, and now it is time to give self- 
government. 

The Chairman. However, are not the conditions very different? 

Mr. Storey. We need only to step across the Mississippi River. 
There there were a great many different races, civilized and savage. 
There were a great many savages in this country. 

The Chairman. But we did not give the Indians self-government 
e?s we understand that word. 

Mr. Storey. Oh, yes; we did. 

The Chairman. Very few of them. 

Mr. Storey. Every one of them. All our relations with the Indians 
have been through treaties. We have recognized the Indians as in¬ 
dependent powers in our midst. We have not endeavored to govern 
the Indians. A treaty can not be made with subjects. But, we have 
left them among themselves to govern themselves. There is no better 
illustration than that very case which you put. This country has 
been inconsistent in letting the Indians govern themselves if they were 
subjects here in our midst. 

What do you say about rights granted under the Constitution when 
in the territory of Albay a commission can pass a law giving the 
military officers power to issue an order saying that 300,000 people 
can be "taken from the cultivation of their crops, deprived of their 
property, and herded together like cattle in a small space? 

Mr. Rucker. Have we any records from the Philippine Islands 
showing that such a condition as that exists ? 

Mr. Storey. No; the facts have not been published, but they exist. 
Such things are not published, but this condition is a fact. If you 
gentlemen will take the pains to go to the War Department and get 


208 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

all the information the Department has you will find them, or you 
will find that they have no records. It is an illustration of the way 
the American people are dealing with the Filipinos. 

We have a good many burglars in Boston, and burglars whom we 
would like to catch, but as long as the rest of us are on the streets it 
is impossible to find them out. Suppose that the entire population 
of Boston, in order to catch those burglars, were placed on one of the 
islands in our harbor, and were told, “ Take as much food as you will 
need; we can not tell how long you will be kept. We do not provide 
you with any shelter; go there and look after yourselves.” 

Well, that is what we have done in the Philippines. Is it not a 
mere juggling with words to say that those people have civil rights, 
or any rights whatever, when they can be dealt with thus? Are 
such proceedings consistent with the law? Another trouble is that 
our representatives are untrained in the government of alien peoples- 
If you want a man to practice law, you give him a training in a 
law school for a certain number of years. If he is going to practice 
medicine^ he goes to a medical school. Ther§ is not a single thing 
that a man undertakes to do in this country in the way of managing 
a business, like a railroad or a mill, for which he is not carefully 
trained until he can be safely trusted with the management of the 
business. But when the business is governing 8,000,000 people we 
say: “This man who has been a professor; this man who has been 
a judge; that man who has been a lawyer; this man who has been 
a teacher; this young man who has been a business man engaged 
in building electric railways, perhaps—excellent men all of them— 
are fit to be sent to govern a people whose language they do not 
know, w^hose traditions they know nothing whatever about, whose 
ideas they do not understand, whose methods of thought they do not 
understand, without any training in this business, they can go there 
and succeed.” They can not succeed, gentlemen. It is not in human 
nature possible that they should succeed. 

When England undertakes to govern India, her men start at the 
bottom. They are admitted to the service by competitive examina¬ 
tion. They slowly work their way up to the top. We have had no 
such system. Take Egypt, which is an instance of England’s suc¬ 
cess. Did it ever occur to you that in dealing with Egypt you are 
comparing English despots with Turkish despots. The conditions 
which England found there were conditions of misrule. It is not 
surprising that the Englishman has improved the situation, but 
what has he done? The Turk still governs. The whole machinery 
of government is in the hands of the same men that were governing 
Egypt, the same class of men that were governing Egypt when the 
English went there. The English sent a very able man there, and 
kept him there for eighteen years; not to govern, but to advise. It 
is true that his advice must be taken, but it comes as advice, not 
command. When Kitchener was made a general of the Egyptian 
army, they did not give him the title of general. He entered the 
service of the Egyptians as sirdar. 

The conditions of success are that the manager remain a great 
many years. He should be permanent. If you change him once a 
month, once a year, or once in two years, you can not have that con¬ 
tinuity of administration which is essential. We are never going to 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 209 

get Americans to settle in the Philippine Islands. We are never 
going to be content to live there. No Englishman in all these cen¬ 
turies has ever gone to India to settle. No man goes there to bring 
up his family. No English farmer, no English manufacturer goes 
to India. They are aliens; sojourners for a time. Their children 
go back to England. And this is inevitably so, must always be so, 
always has, and always will be. 

How is it in the Philippine Islands? What young American is 
going to cast his lot in those islands ? They go out for a year or two. 
-^hey g° out there to stay for a little while. They go out to make 
money to be used at home. Sometimes they go out from a sense of 
duty. But they won’t go there to live among the people, and to 
understand their customs, their needs, and their language. And, 
therefore, you are always going to have difficulty. The United States 
is too tempting. It is much pleasanter to live here. It is much more 
agreeable living among people that one knows than it is to exile 
oneself and undertake to govern the people in the Philippines. What 
you put in on one side of the scales absolutely outweighs what you 
put in the other. And while those conditions do exist, you are going 
to have a government of misrule. 

In the eight years that we have been in the island there has 
already been established a race problem. We regard the Filipinos 
as Indians. It is a great deal pleasanter to put our heads into the 
sand and pretend that they are getting along perfectly well together. 
That is human nature. The country does not like to talk about the 
Philippines. We say, “ They are getting along very well; and don’t 
bother us with them.” But, as a fact, we have two irreconcilable 
elements living in the same islands. And as if one race problem at 
our doors was not enough, we have undertaken to establish another 
race problem on the other side of the Pacific. 

Here is what Secretary Taft has said: 

The American merchants easily caught the feeling of hostility and contempt 
felt by many of the soldiers for the Filipinos. * * * The American news¬ 

papers, which were established, readily took the tone of their advertisers 
and their subscribers, and hence it is that the A.merican community in the 
Philippines to-day is largely an anti-Filipino community, prone to call them 
names, to make fun of them, to deride every effort toward their advancement 
and development. * * * This is unfortunate, and there must come into the 

islands a new set of merchants, who shall view the situation from an entirely 
different standpoint. 

What legislation will you adopt to get into those islands a new set 
of merchants? Will you select the offenders from the American peo¬ 
ple who live there, and send them away? Just so long as we do not 
trust the Filipino our government is bound to be a failure, and that 
condition is going to continue. The race problem which we can not 
settle here is going to be a new race problem on the other side of the 
Pacific. 

Now, let me give an illustration, which may, perhaps, come home to 
you all. Suppose the Filipinos are not satisfied with their governors, 
and that they have good cause to complain. It may be that those gen¬ 
tlemen whom we have sent out there have been right. I am willing 
to admit that they have done their best. But, since we sometimes 
in the United States have men in control of our cities whom we do 
not trust, it is barely possible that there may come out to the Philip- 
35815—08 - 14 


210 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


pine Islands some people who are improper governors. Would you 
people here believe what the Filipino people say against the state¬ 
ments of our own citizens ? 

Let me put a case to you. In 1865 we in the Northern States were 
in a position to govern the Southern States. The population of 
these two sections was the same in blood, the same in tradition, the 
same in language, the same in essential sympathy. We were bound 
to each other by every sort of tie, by marriage, by business, by asso¬ 
ciation of all kinds. We were dealing with them. Through the tele¬ 
graph, the newspapers and letters, there was communication between 
us every hour of every day. There was not a thing going on in 
those Southern States that was not brought to our attention by South¬ 
ern men, year in and year out. And we sent men to govern those 
people whom we now look back upon with a good deal of shame. 
We governed the Southern States for something like eleven years. 
They are badly governed, and when they complained we said, “ No; 
you are disloyal. Though you are our brothers, we do not believe 
what you say.” 

Now, if we did not believe what those men said from 1865 to 1876, 
will the time ever come when we shall believe what the Filipino peo¬ 
ple say against our governors. Take the governors of any city 
in this country, take the directors of great insurance companies, and 
ask them if they have done their duty, and they will tell you that 
their administration has been honest—as faithful, as efficient as it is 
possible for the administration of a great company to be. 

I have no doubt that the man who was recently expelled from the 
control of Cincinnati would tell you that the government of that city 
was honest and pure. I suppose the Philadelphia ring would praise 
their own career. If you w T ere sitting here to try the question of 
whether the government of Philadelphia was or was not honest, you 
would have just as much testimony in favor of the governors as you 
had testimony from the governed. There would be a conflict of tes¬ 
timony. There was no conflict of testimony in Philadelphia. They 
knew exactly where the control was; they" knew whether they had 
been governed honestly or not. And that is what self-government 
means. We may have no evidence against a man whom we know in 
our hearts to be a rascal. If we are asked to prove it in a court of 
justice we can not do it, but the whole community may know it, as 
we know much that we can not prove, and that is what makes it safe 
to trust the people with the power to govern themselves. 

Now, you take from the Filipinos the right of appeal, all voice in 
their government, no matter what the form is. They appeal to deaf 
ears. You say that the responsibility of governing them rests upon 
us. We are too busy to do it; and our experience there has merely 
exemplified what was said a great many years ago by a very excellent 
historian, John Stuart Mill, who said: 

The government of a people by itself has a meaning and a reality, but such 
a thing as a government of one people by another does not and can not exist. 
One people may keep another as a warren or preserve for its own use, a place 
to make money in, a human cattle farm, to be worked for the profits of its 
own inhabitants; but, if the good of the governed is the proper business of a 
government, it is utterly impossible that a people should directly attend to it 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 211 

The'historian Froude said: 

If there be one lesson which history clearly teaches, it is this, that free na¬ 
tions can not govern subject provinces. If they are unable or unwilling to 
admit their dependencies to share their own constitution, the constitution itself 
will fall in pieces through mere incompetence for its duties. 

Or, as Lincoln more briefly put it: 

Those who deny freedom to others deserve it not for themselves, and under a 
just God can not long retain it. 

Mr. Gilbert. What do you say to this proposition, that those 
islands would soon be dominated by the Japanese or the Chinese, and 
that the future condition of the Philippines would be worse instead 
of better ? 

Mr. Storey. Pass this resolution and make a treaty that will keep 
those people out of the islands. Make them agree with us that when 
we let our child try to walk they won’t step in and knock him down. 

Mr. Gilbert. What assurance have we that we could get those 
oriental countries to enter into such a treaty ? 

Mr. Storey. There is an ancient story which I shall try to tell. 
An old negro, when he was asked if he had absolute faith in God, 
said “ Yes. He was then asked: “If God directed you to butt your 
head through that stone wall would you do it? ” “ Well,” he replied, 

“ I should butt at it; butting at it belong to me; getting through it 
belongs to God.” In this particular case, however, I have not the 
remotest doubt that if the United States asked Japan or any other 
power to agree to this treaty they would do so. 

The Chairman. Do you think that the resolution ought to specify 
the conditions? 

Mr. Storey. No, sir. 

The Chairman. Would you leave it entirely to the discretion of the 
President ? 

Mr. Storey. I think so; yes. 

The Chairman. There is another resolution of somewhat similar 
purport introduced by Mr. Burgess, which specifically instructs the 
President to consider the expediency of opening negotiations with 
Great Britain, Germany, France, Russia, Italy,. Spain, and Japan. 

Mr. Parsons. Is China included? 

Mr. Storey. I think that China might very properly come in. 
It is one of the things which, I think, might be included in a treaty 
with China. 

The Chairman. Do you think that there ought to be anything more 
in the way of conditions or requirements ? There is in this resolution 
no condition as to agreements or terms. 

Mr. Storey. I should be very glad if Congress proposes in addition 
to say what treaty it wants. But I think that if seven or eight diplo¬ 
matists could sit down together they could draw up a treaty in a short 
time. 

The Chairman. Let me call your attention to another condition. 
By the other resolution we understand that when established, the 
Philippine government shall agree to maintain equality of trade rela¬ 
tions toward all the signatory powers, and that in the event of war 
between any of the nations of the earth, it shall be neutral. Would 
it not be well if we were to pass a resolution of that character to have 
something of that kind incorporated in it? 


212 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Storey. I see no objection to incorporating both those pro¬ 
visions. 

Mr. Rucker. Have you read the resolution introduced by Mr. 
Burgess ? 

Mr. Storey. No, sir; I have not. 

Mr. Hubbard. If the United States negotiated any such treaty as is 
suggested by this resolution, would not the other powers necessarily 
insist upon an adjustment of trade relations? 

Mr. Storey. I suppose they would; yes. 

Mr. Hubbard. And also open an adjustment of relations as to per¬ 
sonal intercourse. For instance, immigration. Japan and China 
would insist that so far as they were concerned the gates should be 
wide open to immigration into the Philippine Islands. 

The Chairman. Well, in that connection, if China is to be nego¬ 
tiated with, and any such condition is to be in the treaty, as has just 
been intimated by Judge Hubbard, there would be war at once, be¬ 
cause the Filipinos to-day strenuously object to letting down the bars 
to the immigration of Chinese coolies. 

Mr. Storey. I fancy that we could leave China out of the compact 
altogether. 

The Chairman. Still, she is somewhat aggressive, and her boycott 
on American goods is becoming more strenuous every day. It is the 
only way they have of objecting to our exclusion policy. 

Mr. Storey. It is only human nature. They say, “ If you do not 
want to play with us, we would rather not play with you.” 

I have an impression that it is a sound rule of political economy 
that it never pays to do yourself what you can get somebody else to 
do for you more cheaply. China is not a nation that desires to have 
her coolies leave her country. The trouble that we are having with 
China is not because we do not permit her citizens to live as our citi¬ 
zens and do our work; it is because we do not permit her educated 
ones without indignity to enter our ports and travel through our 
country. Our policy in regard to immigration is pretty severe, 
and I will give you an illustration, which, perhaps, may affect you. 

Some years ago, t you will remember, there was a massacre of 
Armenians in Constantinople, and the whole civilized world held its 
hands up in horror. I think it Was said that they killed some 60,000 
people. Among those surviving were a certain number of Armenian 
merchants who had been in Constantinople, and who fled for their 
lives to ships in the harbor. After the massacre they were not 
allowed to return, and they naturally took with them nothing but 
what they had on their backs. They started to go to Marseille, but 
for some reason did not land there;" and then they came to Boston, 
and we said to them, “ Though we sympathize with you, we do not 
want you here, and you can not land,” and had all the other nations 
been as illiberal those unhappy Armenians who had survived the 
massacre had better have perished, because they might have had to 
travel always, and they might have found no place where they could 
have put their feet on land. There was a gentleman in Boston, him¬ 
self an Armenian, who came forward and gave bonds for the whole 
of them—bonds in the sum of $50,000—and I was appointed by the 
Assistant Secretary of the Treasury to scrutinize his security, in 
order to make sure that the bond was good, which I did. 

Now, it seems to me for a great country like ours to say to those 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 213 

unhappy people that they could not land on our shores, and could 
have no share whatever in our prosperity, was just as cruel as it was 
for the Turks to kill the rest of them. I have always had a strong 
admiration for the Armenian who was willing to do what the whole 
80,000,000 of people were not willing to do, and that was to guarantee 
those men a living. 

Mr. Parsons. Returning to the conditions in the Philippines, have 
we not taken a very different course with respect to the Philip- 

E ines from that taken by the English in India, and even that taken 
y the English in Egypt ? 

Mr. Storey. Yes; I think we have. 

Mr. Parsons. The establishment of a common school system is a 
step which the English have never been willing to take in their col¬ 
onies. Is not that so ? 

Mr. Storey. I think that is true. I have no doubt it is true. But, 
of course, when you say that we have established a common school 
system, what we have done is to appoint some teachers, tell them what 
they shall teach, and then tell the Filipinos to pay the bill. We say 
to them, “ Your houses are not quite as well furnished as are those 
of the more prosperous people on this side of the water. We want 
to be benevolent to you. Your house is badly painted. We will 
send you a lot of furniture; we will paint your house; and the bill 
will come to you.” They reply, “ Our treasury is overburdened; our 
commerce is destroyed; we can not get bread to put in our months.” 
The United States is making the Filipinos pay citizens of the United 
States for teaching them things that perhaps they do not want to 
learn. 

Mr. Parsons. As, a matter of fact, is not the public school system 
that we have established there popular with the Filipinos, as a rule? 

Mr. Storey. I take it that the Filipinos are very much like other 
human beings, and that they appreciate the benefit of schooling for 
the children; but a pill that is thrust down a man’s throat by some¬ 
body he does not like is pretty apt to be objected to. I think we 
should object. If we put ourselves in the Filipinos’ place I think 
we should object very much, indeed. 

Mr. Parsons. But do they object? 

Mr. Storey. I think they do. Perhaps they do not make their ob¬ 
jections very loud. 

The Chairman. Judge Storey, there is this fact to be taken into 
consideration: If the Filipinos had had a common school system, or 
any effective school system, before we went there, with which they 
were satisfied at all, and then we undertook to substitute our common 
school system, and had, as you say, crammed it down their throats, 
they might be hostile; but, as a matter of fact, they had no general 
system of education, and they yearned for it, and in certain provinces 
petitioned for it. I heard officers say when I was there last summer 
that they were delighted with what they had, and that that was the 
one thing with which all the Filipinos were pleased—that their 
children were being educated. 

Mr. Bucker. They never had a school system during the three 
hundred years of Spanish rule. 

Mr. Storey. I have no doubt whatever that a great many of the 
Filipinos are glad of the instruction. At the same time, I am sure 
that a great many of them feel that the expense of, the school system 


214 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

should not be imposed upon them. Before we went there they had 
begun to establish a school system. They had normal schools and 
had begun to establish a school system. They appreciated the ad¬ 
vantages of such a system, and they were establishing it in their 
own way. But the great trouble is that we do not recognize the 
fact that the Americans and the Filipinos are different. We say that 
they are inferior and imagine that we can take a Filipino and make 
him an American. We do not recognize the essential difference, and 
we do not treat them sympathetically. The Mohammedans are much 
more successful as missionaries in India than the English, because 
a Mohammedan treats his pupil as a brother. He takes him to 
his home, while the Englishman talks to him in church and cuts him 
on the street. 

I believe that the whole vice of our system is that we are trying to 
make ^n Asiatic into a Yankee. You might as well try to make a 
pine tree into a palm by grafting as to try to make an Asiatic into 
an Englishman. Those essential differences are there. Centuries of 
English rule have not made Irishmen into Englishmen. An Irish¬ 
man and an Englishman are very different. Even Americans are 
different. There is a great difference between the people from one 
section of the country and those from another section. Those differ¬ 
ences can not be eradicated. They must be recognized and respected. 
When we say to the Filipinos that they can govern themselves ulti¬ 
mately, but that it will be a century before they will be independent, 
it is a long way off, and we might as well say that we never will make 
them independent. 

Mr. Parsons. Do we say that? 

Mr. Storey. We are very careful not to say so too distinctly. 

Mr. Gilbert. Is it not the law of civilization that it progresses 
through the stronger races conquering the weaker ones? Did not 
Spain drive out the Moors ? 

Mr. Storey. Had the Romans crushed the Greeks? Had the Ro¬ 
mans who invaded Gaul destroyed that people they would doubtless 
have said that civilization was the gainer, but we know that the re¬ 
verse is true. The expulsion of the Moors was a calamity to Spain, 
as it was to France when the Huguenots were driven to England. 
The French lost the trained artificers, who in no small part laid the 
foundation of England’s manufacturing supremacy. We have killed 
a great many Indians, as the Spaniards did before us. If they had 
been left alone, as they were intended to live, I have no doubt that 
they would have brought into the human race something that was 
worth having. It is rather amusing to see how we used to think about 
Irishmen. 

Mr. Gilbert. You apply your argument to the aborigines of Aus¬ 
tralia. Do you think that the introduction of English would be a 
calamity to the aborigines? 

Mr. Storey. Yes; if the English exterminated them. When we 
went to Japan we found that country inhabited by a people not very 
unlike the people of the Philippine Islands. If we had gone to work 
there and driven them all out, and colonized the country with Ameri¬ 
cans, we should always have looked back to that as a case where the 
superior race had triumphed and the inferior race had been driven 
out. Instead of that, we thought these men worthy of saving. We 
left them to govern themselves, and the result is that you have an 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 215 

Asiatic power of the first class; and the Japanese in science, in medi¬ 
cine, in war, and in everything else have shown themselves our equals. 
Now, if we may apply the same argument to the aborigines every¬ 
where, the difference between them and other aborigines is by no 
means clear. 

I want to read you now, just for a moment, something which may 
perhaps amaze you a little. When James II brought the Irish troops 
to England, this is the way in which the feeling of the English was 
expressed by Macaulay: 

No man of English blood then regarded the aboriginal Irish as his country¬ 
men. They did not belong to our branch of the great human family. They 
were distinguished from us by more than one moral and intellectual peculiarity. 
They had an aspect of their own, a mother tongue of their own. When they 
talked English their pronunciation was ludicrous, their phraseology was gro¬ 
tesque. * * * They were therefore foreigners; and of all foreigners they 

were the most hated, for they had during five centuries always been our enemies; 
the most despised, for they were our vanquished, enslaved, and despoiled 
enemies. They were regarded as stupid and cowardly. 

Could the inferiority of the Filipinos be painted in any stronger 
language than this? “Stupid and cowardly!” Strike from the 
annals of the English Parliament the speeches of Irish orators, from 
the records of the English army the deeds of Irish generals and 
soldiers, from English literature the works of Irishmen and there 
would be very little left—much less than there is now. You may 
take the history of the Irish in every country of Europe. Yon find 
that they have given a President to France, and also many able gen¬ 
erals; to Spain a prime minister; to Austria, Russia, and other 
European countries soldiers, prelates, and diplomats of the highest 
rank. There is no foreign court where there has not been some 
Irishman who has taken the highest honors. I have a belief that 
when the Creator made of one blood all the nations upon earth, he 
had a use for them all, and that if they were properly treated and 
developed they would all be found useful. 

I am no believer in the doctrine that because men are stronger 
they have a divine right to kill others who are weaker. If you 
applied that doctrine you would consider Washington a weakling by 
the side of John L. Sullivan. Rev. Lyman Abbot would confess that 
Sullivan is a very superior person if the test is physical strength. 
Now, in these people there are certain qualities which we are apt to 
find very strongly in the colored people. We are strong and ener¬ 
getic, but some of the other races have gentler qualities which we 
lack. It takes all kinds of people to make up the world. And I 
think, to deal with the general proposition, that the progress of the 
world has not been helped by the tendency to obliterate the weak. 

Mr. Rucker. Does it not after all, as a matter of fact, involve the 
question of trade relations between the Philippine Islands and these 
nations? It Would involve the most complicated negotiations with 
these nations, and we would have to gve up all, practically, to them. 

Mr. Storey. All what? 

Mr. Rucker. We would have to give up all exclusive rights that 
we possess with relation to the Philippines. We would have to give 
up exclusive control and practically place the islands under a pro¬ 
tectorate. Otherwise, we would be left with the responsibility, and 
none of the advantage. 


216 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Storey. That is where we are now. We have got the responsi¬ 
bility without the advantages. 

Mr. Rucker. I think that whatever advantage there may be, 
whether it be great or small, we should have; and we would be just 
as responsible as before and obtain all possible advantages. 

Mr. Storey. You will bear in mind that the policy of the open door 
should be applied everywhere, and that we can not successfully de¬ 
fend the doctrine that the door is going to be open in the Philippines 
to none but ourselves. What would be the result of undertaking to 
say that we are going to keep the door of the Philippines shut, but we 
want to go into China ? 

Mr. Hubbard. But does England open Hongkong, for instance, 
upon terms of absolute equality ? 

Mr. Storey. I remember Bismarck saying to Mr. Schurz—I think 
it was to Mr. Schurz—“ Why should Germany undertake to interfere 
with the colonies of England, when it is true that wherever the Eng¬ 
lish flag floats a German has every right that an Englishman has? ” 
The colonies of England are open to everybody to trade. Our theory 
is that every other door should be open and ours should be shut. I 
should be glad to see that policy abandoned in the Philippines. 

The Chairman. In connection with the resolution, we come to this 
other question. When do you wish the United States, or what date 
do you wish the United States to fix for its withdrawal from the 
islands ? 

Mr. Storey. I think that you can pass the resolution without fix¬ 
ing that date. If I were legislating, I would apply now to the Phil¬ 
ippines the same rule that we applied with such success in Cuba. I 
should say to the Filipinos, “ Call your constitutional convention, 
frame your system, and as soon as your government is formed and 
ready to take control we will let you have your country.” 

The Chairman. Are not these cases very different ? Cuba is one 
island, with one people, speaking the same language—a homogeneous 
population. Here are a thousand islands, with many dialects. There 
are 20 different dialects in the island of Luzon alone, and approxi¬ 
mately 60 in the whole archipelago. Secretary Taft testifies that 
when he was within 100 miles of Manila, in the island of Luzon, he 
attended a theatrical performance, and with him was Chief Justice 
Arrellano. a native Tagalog, a scholarly man, of extraordinary legal 
ability. While the performance was in progress, Secretary Taft 
turned to Chief Justice Arrellano and said“ Mr. Chief Justice, 
what is this they are saying? ” And the chief justice answered: “ I 
do not know what they are talking about.” 

Well, now then, is it not true that there is all the difference in the' 
world between a population like that, of tribes which do not consti¬ 
tute a homogeneous population, inhabitating island after island, 
thousands of whom and millions of whom have never seen each other 
or had any chance to get acquainted with each other or their cus¬ 
toms, establishing a government for themselves in the nature of a 
republic, and the island of Cuba here, where, as I said before, the 
population is compact, in a very small area, and homogeneous ? 

Mr. Storey. I could probably, if I had been Lord North, have 
made almost the same statement in 1776 about America. I could have 
called attention to the fact that the territory which was claimed by 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 217 

the thirteen colonies had not less than probably 150 different tribes, 
speaking different languages, many of them, and hostile to each 
other. And yet it would not in the least degree have affected the 
general proposition that that community was entitled to its inde¬ 
pendence. Now, to take this particular illustration, it may be that 
Arrellano did not understand the particular company that was en¬ 
gaged in performing, but I venture to say that the audience would 
not have understood the company if they had been performing in 
English. English is a foreign language to all those people. If the 
difference in language is all, that should not govern as the reason 
why we should linger. Those people who are there, who know all 
these facts just as well as we do, and a good deal better, are all satis¬ 
fied that they can wisely have and use their independence. On that 
question, I would rather trust them at home on their own soil than 
trust any judgment that you and I can form at this distance, or even 
from the slight acquaintance that any of us may have had. 

Mr. Parsons. You quoted me a while ago as saying that all the 
Filipinos were in favor of independence. What I said was that all 
the political parties were in favor of independence—all the political 
parties. 

Mr. Rucker. Does not the complication suggested by the chairman 
make it quite as difficult for us to govern them as it would for them to 
govern themselves? Isn’t it true that Americans—even members of 
Congress—go to performances in the city of Washington and then 
can not understand a word that is said on the stage ? [Laughter.] 

Mr. McCall. Mr. Hoar suggests to me what might be a fact, that 
any one of us might go out in Representative William Alden Smith’s 
district, in the town of Holland, and go to church and we would not 
understand a word of the sermon. 

Mr. Storey. I have been to church in Cape Breton, where the 
service begins with a service in English and ends with a service in 
Gaelic, and those who have listened to the English can not under¬ 
stand the Gaelic, and vice versa, but they live peacefully together, 
vote at the same polls, and govern themselves. I think that very 
likely the Philippine government would have its troubles. The 
American Government has its. You say that they would have civil 
wars. Have we been free from them ? Is the fact that we have had 
a civil war any reason why we were not fit for governing ourselves? 
There has not been any such monumental example of fighting in the 
history of the world as we have furnished. Through that way, 
through struggles, through difficulties men make their way to free¬ 
dom. You put your child on his feet and let him walk. The first 
thing he does is to tumble down and hit his head against a table. Do 
you say it is the end? This child must never try to walk again. 
On the contrary, you let him go on and learn by repeated falls, per¬ 
haps even by putting his hand on a hot stove. Now, nations are 
taught in exactly the same way. No nation can possibly learn to 
govern itself unless it is given a chance to try. It will make mis¬ 
takes, as we all make mistakes. At this very session of Congress— 
if it is not treasonable to say so—we are certainly making mistakes. 

Mr. Hoar. We have not adjourned yet. [Laughter.] 

Mr. Storey. There is no government in this world, there is no man 
in this world, that does not make mistakes, and the only way in which 
a man learns not to make mistakes is to be independent. Take 


218 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 


England. The Romans were in England for three hundred or four 
hundred years, and when they left they left the English people to 
fight barbarian invaders. They left them to be the prey to Danish, 
Scotch, and Welsh incursions, and to domestic dissension, unable to 
govern themselves until they had passed through a series of struggles 
for two hundred or three hundred years. But they were worth sav¬ 
ing, and they learned to be worth saving by the fights which they 
went through. They made mistakes, and that is true of every nation 
in the world. 

The Filipinos started well. They started with rather high ideals. 
I believe that if we had given them a chance they would have suc¬ 
ceeded. If we had dealt with them as we did with Japan, the result 
would have been as good. They might have made mistakes. If we 
give them a chance now, they will make mistakes. They may become 
involved, more or less, in fighting with each other, but I venture to 
say that there would not be as much life or property destroyed in the 
Philippine Islands in one hundred and fifty years in internecine con¬ 
flicts among themselves as we have destroyed in the six years since 
we began to govern them. Well, I do not think that I can add any¬ 
thing to what I have said. 

Mr. Rucker. I want to ask a question with reference to the schools 
over there. As I understood the chairman, you gave some expression, 
an opinion that you had expressed to you while in the Philippine 
Islands. 

The Chairman. Yes. 

Mr. Rucker. "When with what is familiarly spoken of as the “ Taft 
party ”—now, I want to ask this question merely for information— 
did the Taft party, composed as it was of the most distinguished 
citizens of this country, under the leadership of the former governor 
of the islands, did it come into contact with the average Filipino 
citizen, the average common laboring man, or with just those who 
were holding positions where they had been put by the United States 
Government, and whose feelings and inclinations and whose state¬ 
ments were, perhaps, warped by some of those things ? 

The Chairman. In reply to that question I will say that we met 
practically all classes. We met men who occupied the better part of 
two or three days in demanding independence for the archipelago. 
They were allowed to talk for their party. 

Mr. Rucker. Did you meet a great many of those ? 

The Chairman. Yes; we met a great many of them. 

Mr. Rucker. I thought the truth was this, that in view of the 
fact that they spoke so many different languages there that no living 
man has ever been found who could understand them all. How did 
the Taft party manage to understand them ? 

The Chairman. There are in each of the provinces men who speak 
Spanish. These men spoke to us in Spanish, and we had an inter¬ 
preter, a most fluent and accurate interpreter, from Spanish into 
English and English into Spanish. 

Mr. Rucker. Could he interpret for all of these different tribes ? 

The Chairman. All the spokesmen spoke in Spanish wherever we 
went. 

Mr. Rucker. You did not come into contact with anybody that 
spoke more than one language? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 219 

The Chairman. The educated people and the political people all 
speak Spanish. 

Mr. Hoar. If the gentleman will pardon me a moment, if they have 
delegates from each province who can speak Spanish it does not fol¬ 
low that because you have 40 dialects or 60 dialects that you can not 
have one legislature than can enact laws. I am in favor of giving 
them a legislature and the power to enact laws. 

The Chairman. I think that I can, without undue assumption, say 
that I have been a friend of that proposition from the beginning, and 
that I had some very strenuous combats in this committee to get in¬ 
corporated into the act of 1902 a provision for a legislative assembly 
for the Philippine Islands. I have been from the beginning in favor 
of such a provision. It was only by a divided vote in this committee 
that the House bill containing such provision was substituted for the 
Senate bill, which left it entirely out. We thought that we were 
going a long ways in giving these people the power to elect a lower 
house. 

No law can be passed without the sanction of the lower house. 
Just as soon as they have had experience with a lower house and have 
shown that they are fitted for government, then let the upper house 
be elected, as in Hawaii, and let them learn what self-government 
means, and the responsibility of obeying the will of the majority 
lawfully expressed. I want to call the attention of Judge Storey to 
one statement made to us in the marble hall at Manila. 

Before I forget it, Mr. Storey, permit me to say that we have been 
very greatly interested in and instructed by what you have said. 

Mr. Rucker. I desire to say that Mr. J ones, a member of this com¬ 
mittee, requested me to state to the committee that he regretted very 
much his inability to be here to-day. He was very anxious to hear 
Judge Storey, but found it impossible to be here. 

The Chairman. As I was saying, the principal spokesman, after 
arguing strenuously for giving independence and for the withdrawal 
of the United States Government from the islands, said in substance: 
v I represent or speak for those who govern, the governing class, 
and,” he added “ there is another class which is accustomed to obey,” 
thus showing that he was thoroughly saturated with the old Spanish 
idea of caste. Judge Taft thinks that it will take some little time 
to eliminate that idea, and that the hopelessness, so far as the grant¬ 
ing of immediate independence is concerned, arises from this—that 
those poor people, the laborers, to-day have no idea of their rights. 
They seem to look upon it as legitimate for a man to say: “ Here, you 
come over here and work for me five hours in building this house, 
and you bring over so much material for it.” The man will do it, but 
he won’t get anything for his labor nor anything for his material. 
It is the old feudal idea in an aggravated form. 

Mr. Storey. I have no doubt that there will be trouble of that sort. 
But, on the other hand, you will remember that you are giving them 
a governing class consisting of Americans, and as between the two 
governing classes I can not help feeling that the governing class 
that was born there would be quite as likely wisely to deal with their 
problems as the few people whom we send over there for a few years 
at a time from year to year. I am free to assert that the men whom 
we have sent over there have done the best that they knew how; but 


220 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS* 


they are aliens and can not understand the Filipinos as well as their 
own countrymen do. 

Mr. McCall. We have the same thing in the governing classes of 
our own cities. 

Mr. Storey. I was going to say that if these men, with all their 
ability and all their good intention, have done what has been done, 
and have reduced the Filipinos to the condition in which they now 
are, it is a demonstration of our failure, and I doubt whether any¬ 
thing that bad native government could inflict on those islands would 
be any worse for the people than the things which have been done 
under the Americans. It is not as if we were going to take away a 
perfect government, thoroughly satisfactory, and producing perfect- 
results, and substitute for it a very poor one. The point is that we 
have had eight years to try, and that results have been bad, and bad 
from causes which are permanent and which must continue to pro¬ 
duce the same bad effects. I have no doubt that the time is not very 
far distant when the American people will fully make up their minds 
to let these people go. We have experienced a certain number of 
plagues, and we may suffer a certain number of others; but the prob¬ 
lem that we have to deal with, to govern that alien people, is a prob¬ 
lem that is impossible of satisfactory solution, and the sooner we 
recognize it, the better for us, and the better for them. 

Mr. Rucker. In connection with your statement, my apprehension 
is that the object lesson which the American occupation of these 
islands has given to those people has a tendency rather to help the 
idea of a governing class, and a class to be governed, than to dispel it. 
And my notion is that it would take very little to convert and qualify 
those people for self-government if there was some suggestion of the 
achievement of that opportunity. 

Mr. Storey. I appreciate very highly the courtesy which the com¬ 
mittee has paid me in giving me so much time. If I can be of any 
assistance, I shall be glad to do so at any time. 

Mr. Rucker. If the committee will remain here a few minutes 
longer, as I imagine every gentleman will, Mr. Burgess would like to 
address 'the committee for a short time. 

The Chairman. Before the committee adjourns, I wish to call its 
attention to just where the recent battle with the Moros took place. 
A friend here in the city suggested to me the other dav that “ the 
Moros will be attacking Manila soon, if we don’t look but.” Here 
[indicating on map] is Manila, and that battle was here [indicating] 
on this little island, almost at the southern end of the archipelago, 
several hundred miles from Manila, almost off this map. 

Mr. Rucker. If the committee will listen to Mr. Burgess, he tells 
me that he will detain you only a few minutes. 

STATEMENT OF HON. GEORGE F. BURGESS, M. C. 

Mr. Burgess. We have all listened with a great deal of interest to 
the presentation of this matter by this distinguished member of the 
bar of Massachusetts. I do not wish that any gentleman should 
understand for a moment that there is any conflict between the views 
I have expressed in House joint resolution No. 44, introduced by me 
in the House, and the resolution upon which this interesting address 
has been delivered. In other words, I would gladly accept that reso- 


HEARING BEFORE HOUSE COMMITTER ON INSULAR AFFAIRS. 221 

lution if I can not get mine adopted. I think that mine is better for 
some reasons, and I want just a brief moment to summarize those, 
without any extended argument, because you will be able to see the 
argument that might support each position. 

Now, first, all of us are, as we have more or less of human kindness 
in our makeup, in sympathy with those arguments touching this 
question, which relate especially to the Filipino, his present surround¬ 
ings and conditions. We ought to pay attention to those things, but 
I am frank to say that I am very much more interested in the effect 
upon ourselves and upon our institutions, and our relations with the 
nations with reference to all the advantages which may lie in the 
future for us by our action in the Philippines than I am in the effect 
upon the Filipinos. I am frank to say that. I think that danger 
and self-defense are much more important things, which relate to 
ourselves, when we get down to the proposition. I am disposed to 
look at it almost altogether from that standpoint. However, though 
I am going to speak of it only from that standpoint rather than from 
the standpoint of the humanitarian and benefit to the Filipino peo¬ 
ple, I think that we ought undoubtedly to treat them justly. 

We ought not to make their condition worse, undoubtedly; but we 
ought to look at it in sensible ways in respect to ourselves. We 
should permit nothing to be done which may be of injury to the 
great American Republic. I am one of those who believe in Amer¬ 
ican influence through power, intelligence, wealth, commerce, trade, 
and all the things that make a nation great, and that the day is not 
so very far distant w T hen America will be the dominant nation of the 
world’s history. I would like to see that happen. It can not hap¬ 
pen too fast to suit me. 

Now, ± think that if any resolution is to be passed looking to the 
neutralization of the Philippine Islands by treaty with the powers of 
the world and to certain features when independence is set up, I think 
that there ought to be a direct declaration of Congress of what our 
purpose in the Philippines is. Just to say, in order to neutralize them 
with a view to ultimate independence, is, I think, a little too indefi¬ 
nite. For this reason, above all others, the treaty might fail. I 
agree with the gentleman who spoke here. I do not think it will. I 
think a treaty can be negotiated. I think that the national hatreds 
and national jealousies, so to speak, will force all to neutrality that 
is in that sort of a treaty. But we can not know that, and trade dif¬ 
ferences, as suggested by this gentleman, may arise and may prevent 
the final negotiation of this treaty. 

I regard it as of supreme importance that we declare what the 
American will is on this subject. I want just briefly to present two 
reasons for that, independent of what may be said with reference to 
the Filipino people, independent of whether or not we ever give them 
independence, because I think that these two reasons are important 
enough. If we fail in the negotiation of the treaty and we can not 
set up an independent government there that will stand, so far as I 
am concerned Russia or Japan or some other power might take this 
problem off of our hands and relieve us of the responsibility. 

The first proposition is this: All government, Mr. Chairman, pre¬ 
supposes legislation. I do not care whether it be a government of 
the people, who own and control the government, or whether it be a 
government of a colony, as in the case of India under Great Britain 


222 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

or in the Philippines under us. In any event, where there is govern¬ 
ment, legislation must go on at more or less regular stated intervals. 
Legislation presupposes fixed relations, presupposes certainty of 
operation, and presupposes enduring, permanent conditions upon 
which legislation can operate and upon which it can be predicated as 
well. 

Now, just at first blush if any man asks the question to-day, 
“ What is to be the status of the Philippine Islands ? no man can 
say. Now, perhaps the greatest constitutional lawyer in the domi¬ 
nant party at the special session in the Senate last year voiced the 
correct idea when a Democratic Senator was incorporating in the 
Record a letter written by Secretary Taft saying that the Admin¬ 
istration’s policy was so and so, and was commenting on it, Senator 
Spooner briefly interrupted and presented these views. He said: 
“ No man can say what the future of the Philippine Islands will 
be. No power can fix their status except the American Congress, 
for the Constitution fixes that matter beyond all question.” 

Now, so long as Congress refuses to declare any purpose, and 
refuses to define any status, we are completely at sea in legislating 
on any issue touching the internal affairs of the Filipino people. 
We can not successfully legislate in a business way until we know 
what is the status, whether they are to have a government of their 
own, or whether they are to be a colony, whether we are to turn 
them loose under an arrangement for their independence, or under a 
neutrality treaty with other nations, or whether we are to hold 
them in vassalage, or what, there could be no sensible legislation. 

But there is a stronger reason than that, and that is this: Per¬ 
haps there is not a more uniformly accepted political doctrine in 
this country than what is commonly known as the “ Monroe doc¬ 
trine.” We may have our differences about the extent of it—the 
scope of it—about how far it ought to be extended as applicable to 
South American and Central American countries; but we are all 
in accord as to its effect upon this country and the Eastern Hemi¬ 
sphere. As to the scope of the doctrine with respect to foreign coun¬ 
tries, we are all agreed that that doctrine is an assertion by this 
Government that no government in any part of the Eastern Hemi¬ 
sphere will be permitted to acquire territory and exercise dominion 
over it in the Western Hemisphere We are all equally enamored of 
the value of that doctrine. 

Now, the point is this. So long as there is any question as to our 
intention toward the territory of the Philippine Archipelago and its 
people, proportionately to the question of our intention will be the 
peril of the Monroe doctrine in the mind of the world. For it is but 
a truism to say that we can not assume this doctrine against the rest 
of the world and then hold that no government of the Eastern 
Hemisphere can acquire territory and exercise dominion over it in 
the Western Hemisphere. We can not say that any more than, as 
the gentleman argued here unanswerably, we can say, “ Open the 
door to us everywhere, but close the door here to all others but us.” 

We control these islands in the Orient, and that is quite true with 
reference to the Monroe doctrine. The question here is, “ Can that 
affect us?” It has an effect upon the foreign world disastrous and 
terrible in scope and effect, and may at any time turn. Because if 
pressed by sufficient authority, or by "commercial antagonism, seeking 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 223 

commercial advantages, it should be sufficient to induce Germany or 
England or France or any other of the great powers to go to war 
with us, it will likely turn upon just some such question as this. 
And they will just say, “ You can claim the Monroe doctrine, but you 
have exercised for eight years dominant power over the territory of 
the Eastern Hemisphere, and you say that we can not take territory 
in the Western Hemisphere to satisfy the debts of our people.” We 
would be absolutely defenseless. 

And now there is another reason, I think, why the first sentence of 
my resolution ought to be adopted, and that is this: I believe that 
the possibility of negotiating the treaty satisfactorily would be 
greatly increased by adopting the method which has all through 
our history been characteristic of what we proudly call “American 
diplomacy.” It has been distinct from the history of every other 
country in the world’s history. We have acquired the habit of say¬ 
ing exactly what we mean to the world, of telling the straight-out 
truth. In other words, instead of attempting to conceal our thoughts 
in language of negotiations along diplomatic channels, we have just 
boldly and frankly said exactly what we thought, and again what 
we intended to do, just as Cleveland did in the Venezuelan case. And 
that had a remarkably good effect on that procedure. 

And in this matter I think it better and wiser just to say to the 
world what we mean to do, exactly what Ave intend to do, declare our 
purpose, not only for our own protection on account of the Monroe 
doctrine, but to attain success in this matter. It would produce a 
healthful, wise, and salutary effect upon the mind of the world. By 
so declaring, it will have a strong tendency to induce them to accept 
the treaty. I have carefully thought the matter over in framing that 
first section. Party issues have heretofore arisen in this matter which 
have done more than all else, in my judgment, to prevent anything 
being done. 

I have said that it is the aim and purpose of the United States 
to cease exercising sovereignty over the Philippine Islands, and it is 
our preference to accomplish that purpose by setting up a stable, 
independent government. Now, that is all that I would be willing 
to declare. I am not willing to say that we might never make any 
other disposition of the islands. 1 am not willing to say that we 
will set up an independent government in a year, or two, or three, 
or four, or five years, under an American protectorate; I am not 
willing to say that we will ever set up one under an American pro¬ 
tectorate ; I am not willing to fix our action in the future along any 
of those lines. But I am willing, and I think it wise and just to our¬ 
selves and to the world, to declare exactly what ultimately we intend 
to do to the extent that the present conditions will permit us to do it, 
and to attempt to work it out along those lines. 

Now, despite all arguments regarding this resolution, if it should 
be passed by the American Congress and approved by the Executive, 
my judgment is the treaty could be effected. If we do not succeed 
in arranging the treaty, the declared purpose will still remain, and 
then we may dispose of the islands to Japan or to Germany, and by 
the very declaration each government will be driven to accede to that 
treaty much more easily. The resolution introduced by Mr. JMcCall 
I would gladly accept if I could get no better. But if that were to 
pass, and the treaty fail, we would be up in the air just as badly as 


224 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

we are now. Nothing has been determined. Nothing has been set¬ 
tled. Nothing has been fixed. And pending the long negotiations, 
even if the resolution should pass, pending the long negotiations, we 
have no definite status still. 

We do not know whether it will be finally settled, and if so, when. 
Pending that time we have no fixed relation; and I think it better 
in view of that—and this idea grows more and more strong with me 
as I study the question—I think it is the duty of the American Con¬ 
gress to declare our purpose, and I think that the time is upon us to 
find out what our constituencies want to be done in the matter, and 
have the nerve to say to them, “ Oh, I think so.” If we can not find 
out from our constituents, and are not willing to declare our purpose 
in six years, when will we? If we never act we will never cease to 
exercise sovereignty in the Philippine Islands. When will we be 
willing to declare it? Ought we not to exercise the power inde¬ 
pendently and exclusively vested in Congress ? 

Now, I believe, Mr. Chairman, that is all I have to say with refer¬ 
ence to my resolution. The rest .of it, I think, is covered by what Mr. 
Storey said, and said so well, and what he said is as applicable to the 
rest of my resolution as to his own. 

I thank you very kindly for your attention. 

| The Chairman. We are very greatly obliged to vou, Mr. Burgess. 


59th Congress, ) HOUSE OF REPRESENTATIVES. J Report 
1st Session. j j jjo. 4214. 


LEASING OF THE BATAN ISLAND MILITARY 
RESERVATION. 


May 16, 1906.—Committed to the Committee of the Whole House on the state of the 
Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 
submitted the following 

REPORT. 

[To accompany H. R. 17293.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 17293) to authorize the leasing of the Batan Island Military 
Reservation for coal-mining purposes, beg leave to report that they 
have had the same under consideration, and recommend that said bill 
do pass with the following amendments, to wit: 

On page 1, line 5, of the bill, after the word “any” insert the words 
“person, firm,” 

On page 2, line 5, of the bill, after the word “ and” insert the words 
“by such person or firm, or,” 

On page 2, at the end of line 15, strike out the period and insert in 
lieu thereof a semicolon, and then add the following: “and any such 
lessee shall by such lease be obligated at all times to have on hand a 
supply of coal sufficient to meet all orders of the Government of the 
United States or of the government of the Philippine Islands for coal, 
and all orders of either of said governments for coal shall be filled 
prior to any order of, or contract with, any other party.” 

On page 3, line 21, of the bill, after the word “Fourth” insert the 
following: “That such lease shall contain such other and further 
restrictions as the Secretary of War may see fit to impose,” and make 
the fourth subdivision of section 3 of the original bill constitute a 
fourth section to the bill. 

So that said bill when amended shall read as follows, to wit: 

A BIIX to authorize the leasing of the Batan Island Military Reservation for coal-mining purposes. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled , That the Secretary of War be, and he is hereby, authorized to 
lease the coal-mining rights in the Batan Island Military Reservation to any person, 
firm, company, or corporation organized under the laws of the United States, or any 

35815—08 - 15 225 





226 LEASING OF THE BATAN ISLAND MILITARY RESERVATION. 


State thereof, or of the Philippine government, which, in his opinion, shall be deemed 
responsible for carrying out the provisions of said lease. 

Sec. 2. That the term “mining rights’’ in the first section hereof shall be deemed 
to include the use of all land included in and all natural products of the said. Batan 
Island Military Reservation which may be necessary for and consistent with the 
establishment and operation of a coal mine and coaling station, and shall also include 
the right to take and use water from the Cacraray Military Reservation. 

Sec. 3. That the said lease shall be granted after due advertisement and public bid¬ 
ding for same, and shall run for a period not exceeding fifty years. Said lease shall 
be signed on behalf of the Government of the United States by the Secretary of War 
thereof, and by such person or firm, or, on behalf of the company or corporation 
undertaking the establishment and operation of said coal mine by the chief officer 
thereof thereunto duly authorized by the stockholders and directors of the same, and 
shall contain among others the following provisions: 

First. That all branches of the Government of the United States and of the govern¬ 
ment of the Philippine Islands thereof shall be supplied with coal such as they may 
desire laid on board ship at the harbor of Batan Island, known as Coal Harbor, at a 

E rice not to exceed 10 per cent above cost price of said coal, and any such lessee shall 
y such lease be obligated at all times to have on hand a supply of coal sufficient to 
meet all orders of the Government of the United States, or of the government of 
the Philippine Islands, for coal, and all orders of either of said governments for coal 
shall be filled prior to any order of, or contract with, any other party. 

Second. That the necessary wharves for receiving vessels of up to 32 feet draft and 
for loading coal thereon shall be erected and maintained by the company or cor¬ 
poration operating the said mine. 

Third. That the items included in the calculations of the cost of said coal shall 
consist of all items of expense for labor necessary for producing the coal and for 
handling and loading the same on board ship, for the proper care and handling of 
machinery connected therewith, for the proper care and management of the interior 
workings of a coal mine and all machinery connected with the safe and economical 
operation thereof, and for the proper upkeep of all exterior buildings, grounds, and 
machinery incident to the operation of a coal mine and coal-loading station; all items 
of expense for labor and material connected with the repairs of all machinery, roll¬ 
ing stock, buildings, and apparatus necessary for the safe and economical upkeep of 
the mine and its appurtenances and of the coal-loading apparatus and docks, but 
shall not include the cost of new work for the extension of the plant; all items of 
expense for supplies for the safe and economical extraction of coal, and the mainte¬ 
nance of the offices, buildings, and machinery maintained, erected, or in use on the 
aforesaid reservation; all items of general expense, such as taxes, insurance, and rea¬ 
sonable depreciation on plant and property, and such others as may be also directly 
and solely connected with the management of the plant and offices installed on the 
reservation for the purpose of mining and loading coal, which shall include salaries 
for persons resident at the plant and necessary for the management and conduct 
thereof as above set forth. 

Fourth. That such lease shall contain such other and further restrictions as the 
Secretary of War may see fit to impose. 

Sec. 4. That all books and records of every nature of the person, firm, company, or 
corporation operating the said mine shall be subject to examination and inspection 
by any official or employee of the United States Government designated by the Secre¬ 
tary of War, and that any evasion of this provision shall, at the discretion of the 
Secretary of War, operate to render null and void any lease granted under the pro¬ 
visions of this act. 

At present the annual consumption of coal in the Philippine Islands 
by the United States Government and by the Philippine government 
is about 200,000 tons, of which 60,000 tons are consumed in Manila in 
the government ice plant and in various other public institutions and 
works and the remaining 140,000 tons by Government transports and 
coast-guard ships, tugs, and other steam vessels. Coal in Manila now 
costs these governments about $5 per ton. It comes either from Japan 
or from Australia. 

The purpose of this bill is to reduce the cost of coal in the Philip¬ 
pines to these two governments, so as to effect an annual saving of 
approximately $400,000. This purpose is to be accomplished by the 


LEASING OF THE BATAN ISLAND MILITARY RESERVATION. 227 

leasing of government coal lands in the island of Batan, in the Philip¬ 
pine Islands, on such terms as will secure to these governments all 
needed coal at a price not to exceed 10 per cent above the cost of 
mining the same. 

The island of Batan, distant by water route 450 miles from Manila, 
is about 5 by 10 miles in dimension. In 1903 the Government of the 
United States detailed Lieut. H. L. Wigmore, Corps of Engineers, to 
make a thorough investigation of the island with a view to determin¬ 
ing the extent and value of its coal fields. This officer devoted prac¬ 
tically two years to making a careful, systematic investigation with 
drills and other apparatus and by the actual mining of coal. In his 
testimony before your committee and also in his official report to the 
Government the lieutenant declares that with diamond drills he found 
the coal measures, two in number, separated by a strata of limestone, 
the upper set containing from 6 to 10 feet of coal, and the lower set 
from 20 to 25 feet of coal, as revealed by the drill holes. He found 
the coal abundant in quantity and very clean, in the last particular dif¬ 
fering very essentially from the dirty Japanese coal. 

The Batan coal runs uniform in quality, the seams extending from 
the western to the eastern end diagonally across the island. The 
island is one ridge, sloping both ways to the shore. The highest out¬ 
crop of coal is about 500 feet above sea level, and the drills revealed 
coal measures to at least 300 feet below sea level. It is the judgment 
of Lieutenant Wigmore, as a result of his investigations, that prac¬ 
tically the whole island is underlaid with coal. 

The pending bill proposes that the Secretary of War, after due 
advertisement and the receipt of bids in open competition, shall lease 
the Batan coal fields for the purpose of having them duly mined, the 
lessee to agree and be bound to supply the Government of the United 
States and the government of the Philippine Islands with such coal as 
they may desire, laid on board ship at the harbor of Batan Island, 
known as “Coal Harbor,” at a price not to exceed 10 per cent above 
the cost price of said coal. 

The testimony before your committee shows that coal which now 
costs these governments $5 a ton could be mined and put on board 
ship in the harbor at Batan Island at an outside cost of $2 a ton. Add¬ 
ing 10 per cent to this would increase the cost to $2.20 per ton on 
board ship in that harbor. 

There is only one harbor in the island of Batan, but this is one of 
the finest in the Philippines, ships drawing 32 feet of water being able 
to go within 100 yards of the shore line. The harbor is alsolutely 
landlocked, so that a vessel could coal at any time of day or night. 
Moreover, the island is only about 50 miles from the line of travel of 
vessels running from Honolulu to Guam through the Straits of San 
Bernardino to Manila. 

Your committee are of the opinion that as a business proposition the 
leasing of these coal fields on the terms set forth in the bill as reported 
would be a good one for both of these governments. 

Your committee therefore recommend that the bill as amended do 
pass. 


59th Congress, ) HOUSE OF REPRESENTATIVES. J Report 
1st Session, f _ * No. 3214 


REGULATION OF SHIPPING IN THE PHILIPPINE ARCHI¬ 
PELAGO, ETC. 


Apeil 13, 1906.—Referred to the House Calendar and ordered to be printed. 


Mr. Crumpacker, from the Committee on Insular Affairs, submitted 
the following 

REPORT. 

[To accompany H. R. 18025.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 18025) to regulate shipping in trade between ports of the 
United States and ports or places in the Philippine Archipelago, 
between ports or places in the Philippine Archipelago, and for other 
purposes, reports said bill to the House without amendment with the 
recommendation that it do pass. 

By an act approved April 15, 1904, it is provided that after the 1st 
day of July, 1906, the coastwise laws of the United States shall apply 
to shipping between the United States and the Philippine Archipelago. 
This bill is a reenactment of that law, changing the date when the coast¬ 
wise laws shall go into operation from July 1, 1906, to April 11, 1909. 
When the original act was passed, it was hoped and expected that 
American shipowners would provide adequate facilities to take care of 
the shipping trade between the United States and the Philippine Archi¬ 
pelago before the date upon which the coastwise laws should become 
operative, but it is now manifest that this will not and can not be done. 
The shipping trade between the Philippine Archipelago and the United 
States is largely an incident to trade between the United States and 
the Orient generally. It is not in itself sufficient to justify the estab- 
ment of independent steamship lines. Under existing laws that trade 
is conducted by steamships generally in connection with the trade of 
the Orient, and satisfactory facilities are afforded to accommodate the 
trade. Boats, both American and foreign, doing business between 
Asiatic ports and the United States, enter the ports of the Philippine 
Archipelago and discharge and take on cargo, as the needs of the trade 
may demand. 

There are not enough ships of American registry plying between 
the United States and oriental countries to accommodate the Philippine 
228 








REGULATION OF SHIPPING, PHILIPPINE ARCHIPELAGO, ETC. 229 


trade, and that trade is not of sufficient magnitude to justify the estab¬ 
lishment of independent ship lines for its accommodation. If the 
coastwise laws shall apply to shipping between the United States 
and the archipelago from July 1 next, the result will be to withhold 
from the Philippine Archipelago many facilities it now enjoys and to 
largely increase the rate of freight, and it would be exceedingly dis¬ 
astrous to the commerce of the archipelago. Products shipped from 
the Philippine Islands to this country now are required to pay 75 per 
cent of the customs duties fixed by the Dingley law; and if the archi¬ 
pelago is put at such disadvantage in its shipping facilities, it will 
more than offset the small reduction it receives in the customs duties 
imposed by this country. 

The archipelago will be at a greater commercial disadvantage than 
if it were absolutely foreign territory. The date, April 11, 1909, is 
fixed because that is the date when the special commercial privileges 
granted to Spain under the Paris treaty will expire. It is believed 
that by that date such changes will be made in the customs laws of the 
United States as affecting Philippine commerce and in American ship¬ 
ping that the coastwise laws can apply to the Philippine commerce 
without serious injury. 

The Philippine Commission strongly recommends the enactment of 
this bill, and that recommendation is earnestly indorsed by the Secre¬ 
tary of War. 


[Public—N o. 136.] 

An Act To regulate shipping in trade between ports of the United 
States and ports or places in the Philippine Archipelago, between ports or places in 
the Philippine Archipelago, and for other purposes. 

Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled , That on and after April 
eleventh, nineteen hundred and nine, no merchandise except supplies 
for the Army or Navy shall be transported by sea, under penalty of 
forfeiture thereof, between ports of the United States and ports or 
places in the Philippine Archipelago, directly or via a foreign port, 
or for any part of the voyage, in any other vessel than a vessel of the 
United States. But this section shall not be construed to prohibit the 
sailing of any foreign vessel between any port of the United States 
and any port or place in the Philippine Archipelago: Provided , That 
no merchandise other than that imported in such vessel from some 
foreign port which has been specified on the manifest as for another 
port, and which shall have not been unloaded, shall be carried between 
a port of the United States and a port or place in the Philippine 
Archipelago. 

Sec. 2. That on and after April eleventh, nineteen hundred and 
nine, no foreign vessel shall transport passengers between ports of the 
United States and ports or places in the Philippine Archipelago, either 
directly or by way of a foreign port, under a penalty of two hundred 
dollars for each passenger so transported and landed. 

Sec. 3. That sections one and two of this Act shall not apply to the 
transportation of merchandise or passengers between ports or places 
in the Philippine Archipelago. Until Congress shall have authorized 
the registry as vessels of the United States of vessels owned in the 
Philippine Archipelago the government of the Philippine Islands is 
hereby authorized to adopt, from time to time, and enforce regula¬ 
tions .governing the transportation of merchandise and passengers 
between ports or places in the Philippine Archipelago. 

Sec. 4. That sections one and two of this Act shall not apply to the 
voyage of a vessel between a port of the United States and a port or 
place in the Philippine Archipelago begun before April eleventh, 
nineteen hundred and nine. 

Sec. 5. That sections one and two of this Act shall not apply to ves¬ 
sels owned by the United States. 

Sec. 6. That on and after the passage of this Act the same tonnage 
taxes shall be levied, collected, and paid upon all foreign vessels coming 
into the United States from the Philippine Archipelago which are 
required by law to be levied, collected, and paid upon vessels coming 
into the United States from foreign countries: Provided , however , That 
until April eleventh, nineteen hundred and nine, the provisions of law 
restricting to vessels of the United States the transportation of pas¬ 
sengers and merchandise directly or indirectly from one port of the 
United States to another port of the United States shall not be appli¬ 
cable to foreign vessels engaging in trade between the Philippine 
Archipelago and the United States: And provided further, That the 


231 


Philippine Commission shall be authorized and empowered to issue 
licenses to engage in lighterage or other exclusively harbor business 
to vessels or other craft actually engaged in such business at the date 
of the passage of this Act, and to vessels or other craft built in the 
Philippine Islands or in the United States and owned by citizens of 
the United States or by inhabitants of the Philippine Islands. 

Sec. 7. That the Secretary of Commerce and Labor shall, from 
time to time, issue regulations for the enforcement of this Act, except 
as otherwise provided in section three: Provided , That such of the 
navigation laws of the United States as are in force in the Philippine 
Archipelago in regard to vessels arriving in the Philippine Islands 
from the mainland territory and other insular possessions of the United 
States shall continue to be administered by the proper officials of the 
government of the Philippine Islands. 

Sec. 8. That all laws and parts of laws in conflict with the provisions 
of this Act are hereby repealed. 

Approved, April 30, 1906. 



CONSTRUCTION OF WHARVES, PIERS, ETC., IN THE 
ISLAND OF PORTO RICO. 


Committee on Insular Affairs, 

House of Representatives, 
Tuesday , February 27 ,. 1906. 

The Committee on Insular Affairs met at 10 o’clock a. m., Hon. 
Henry Allen Cooper in the chair. 

STATEMENT OF MR. MIGUEL GUERRA-MONDRAGON, ATTORNEY 
AT LAW, OF SAN JUAN, P. R. 

The Chairman. What is your name in full ? 

Mr. Guerra. Miguel Guerra-Mondragon. 

The Chairman. Where do you reside? 

Mr. Guerra. In San Juan, P. R. 

The Chairman. And you have lived there how long—all your life ? 

Mr. Guerra. All my life. I was born and raised there. 

The Chairman. What is your profession ? 

Mr. Guerra. I am an attorney at law. 

The Chairman. You desire to be heard, I believe, on House bills 
Nos. 15327 and 15339. The first-mentioned bill is to grant Carlos 
Conde Casariego a franchise to build, maintain, and operate a wharf 
and pier in the harbor of San Juan, P. R., and for other purposes; 
and the second is a bill to empower the Secretary of War to au¬ 
thorize the construction or extension of wharves, piers, or other struc¬ 
tures on lands underlying the harbor areas and streams in or sur¬ 
rounding Porto Rico and the islands adj acent thereto. 

Please proceed with your statement, Mr. Guerra, and present your 
views upon these measures, or upon either of them, as you may desire. 

Mr. Guerra. Mr. Chairman and gentlemen of the committee, I de¬ 
sire to speak in regard to the bill No. 15327, which was introduced in 
the House of Representatives by the commissioner of Porto Rico—Mr. 
Larrinaga. It is a bill authorizing Carlos Conde Casariego to build 
a wharf and pier in the harbor of San Juan, P. R., and it was at my 
request that Mr. Larrinaga introduced said bill in the House. Mr. 
Conde is the senior member, or the head, rather, of the old firm of 
Villar & Co., who are for the island of Porto Rico the sole agents and 
representatives of four different lines of steamers, to wit, the Red 
“ D ” Line of steamers, plying between New York and Porto Rico 
weekly; the Herrera Line, between Cuba and Porto Rico; the 
Norton Line, and the River Plate and Cuba Line of steamers, plying 
between England and Porto Rico. It was through Mr. Conde’s 
activity, energy, and enterprise that the first line of American steam¬ 
ers came down to our island. It was through his activity that they 
consented to try Porto Rico as a future field for the operations of 
those American lines. 

The inducements proved to be good and profitable, and we might 
232 



FRANCHISES IN PORTO RICO. 


233 


say that Mr. Conde is the pioneer, the first man through whose en¬ 
ergy the first American line of steamers called at Porto Rican ports 
since the change in our government. That line—in other words, the 
Red “ D ” Line—carries one-third of all the exports from the island 
of Porto Rico to this country. In fact, all the exports or products 
of the island to the” United States are carried to-day by American 
vessels, and the Red “ D ” Line carries one-third of the whole. Since 
the year 1900 the statistics show a great increase and rapid develop¬ 
ment of the exports from Porto Rico to this country, and since that 
year the real necessity of having another wharf and pier built in 
the harbor of San Juan for the loading and unloading of vessels has 
been felt. 

There is now actually just one pier that is of any avail, and that 
is in the hands of the New York and Porto Rico Steamship Com¬ 
pany. The trade and the traffic has increased to such an extent that 
even that pier is always congested, and you sometimes see some of 
the steamers and liners of that company utilizing the public wharves 
to discharge and unload their cargoes. The resulting inconvenience 
from this lack of wharves and piers is very great, not to speak of the 
expense. Steamers have to anchor in the middle of the bay, large 
launches and barges are brought alongside for the unloading opera¬ 
tions, and then these launches and barges carry the cargoes down to 
the public wharves, which operation in the rainy season is not only 
prejudicial because of the great damage done to the merchandise, 
but it involves great expense, outside of the rough handling that the 
merchandise suffers and the inconvenience of the delay. 

I brought with me a letter written by Mr. Paniagua, the president 
of the Chamber of Commerce of Porto Rico, an organization 
which corresponds to the boards of trade of the various towns and 
cities of this country. This letter expresses much better than I could 
the necessity so deeply felt for another wharf and pier in the harbor 
of San Juan and the utility the building of such wharf and pier 
would mean to the commerce of San Juan. The original letter is 
in Spanish, but I have made a translation of it in English. It is 
in answer to a letter from Mr. Conde to Mr. Paniagua, the president 
of the chamber of commerce, asking for the moral and material 
support of the chamber to the project in question. The letter reads 
as follows: 

Chamber of Commerce of Porto Rico, 

San Juan, P. R., January 15, 1906. 

Mr. Carlos Conde, San Juan, P. R. 

Dear Sir : It affords me a great pleasure to answer your esteemed letter of 
December 27th ultimo, in which you solicit the support of the Chamber of 
Commerce of Porto Rico to the project you contemplate of petitioning for a 
franchise to build a wharf and pier in our harbor of San Juan. 

There is no other scheme that would so greatly please the commerce of this 
town as the construction of a new pier, for it would meet a generally felt 
necessity, and I take great pleasure in communicating to you that the chamber 
of commerce heard of your plans with great enthusiasm, deciding to lend you 
its strongest support, when I submitted them in the last meeting we held. 

Covered piers are a necessity which the trade of San Juan has been feeling 
for a long time; and the Spanish administration, among the improvements it 
was making in our harbor before the Spanish-American war, had in its plans 
the building of one or more piers of that kind. The change of sovereignty 
paralyzed these works and private enterprise afterwards took the place of the 
official one, the New York and Porto Rican Steamship Company having built 
one pier that has resulted in great convenience and utility to merchants, manu¬ 
facturers, farmers, and travelers. 


234 


FRANCHISES IN PORTO RICO. 


But the traffic in our port has so considerably increased during the last few 
years that one pier is no longer sufficient .to meet our demands, and even the 
said company has sometimes been compelled to utilize other means for the 
unloading of its vessels on account of the congestion of traffic in the aforesaid 
pier; consequently it becomes a necessity to build a new pier. 

Furthermore, the natural increase of our traffic will be extensively greater 
in the very near future, by reason of the new establishment of large sugar 
factories along the northern coast of the island, which! will export their prod¬ 
ucts by this port, and besides by the fact of the approaching termination of the 
railroad that will connect San Juan and Ponce, by reason of which the sale of 
the products of the western region, heretofore confined to the merchants of that 
part of the country, will be extended over to the traders of this district, who 
will export their products by this port. 

Now, well, all the requirements of this increase in our trade could not be 
met by the means at present in our hands, the only pier we have being not 
sufficient to meet the demand, and therefore the plan you contemplate of build¬ 
ing a second pier, among other reasons, will be, only by those mentioned, of 
great utility and a great remedy to the increasing necessities of our traffic. 

I congratulate you, therefore, for your idea, and you may readily count on 
the support of the chamber of commerce, that, at any time, will be by your 
side, cooperating by all the means available to the prompt realization of your 
beneficial projects. 

I remain, your, sincerely, M. Paniagua, 

President Chamber of Commerce . 

Mr. Paniagua convoked a meeting of the chamber of commerce and 
proposed to them Mr. Conde’s plans, and they passed a resolution 
approving them and deciding to lend Mr. Conde their moral support 
by letters to the governor and by this letter, which the president of 
the chamber authorized me to use as an indorsement of this project to 
this honorable body. 

The Chairman. What company do you say owns the present 
wharf and pier? 

Mr. Guerra. The New York and Porto Rican Steamship Company. 

The Chairman. Is that company interested in the cultivation of 
some of the lands in the island itself ? 

Mr. Guerra. No, sir. 

The Chairman. Have the merchants in San Juan ever had any 
difficulty in getting access to the pier or in getting their goods 
shipped ? 

Mr. Guerra. Yes, sir. Those difficulties arise from the fact that 
that company is always utilizing the pier, although they are operat¬ 
ing that pier under a permit given by General Davis when he was 
military governor of the island, which was afterwards officially con¬ 
firmed by the War Department. Under that permit the company is 
obliged to rent their pier to the other merchants there for the loading 
and unloading of merchandise for a certain time, but the company’s 
business is so immense that they have not the space nor the time to 
rent the pier to the other parties. 

Goods are very roughly handled there, as a rule. Their prices are 
high, as there is no competition in that line of business in Porto 
Rico. There have been several instances of difficulties that have 
arisen between the said company and the merchants in San Juan on 
that very account. And it was Mr. Conde who asked for this fran¬ 
chise as a man whose interests have suffered the most from all these 
difficulties. If the franchise be granted the pier will be built by a 
company composed of all the most prominent merchants of San Juan 
in order to be on the same level to compete with the other company. 
Now, the struggle is uneven. They are fighting with different 


FRANCHISES IN PORTO KICO. 235 

weapons. The New York and Porto Pico Steamship Company have 
the best one at hand to-day. 

The Chairman. Is there any way now to regulate the charges 
which are demanded by the New York and Porto Rican Steamship 
Company, or do they make such charges as they please? 

Mr. Guerra. I think they have a maximum and a minimum. In 
fact their franchise or permit is something of a mystery in Porto 
Rico. As a lawyer, I myself have several times requested access to 
their permit in the War Department here, and on numerous occasions 
we have tried to get at it in Porto Rico, and have never been able to 
find it in the Secretary’s office or in any of the offices of the executive 
council. That is why we have come here with the idea, at first, that 
the Secretary of War would grant us a franchise. We waited for 
the outcome of another franchise which was asked of the Secretary 
of War by a Mr. Luce, of Boston, who, I think, is a brother-in-law 
of Senator Lodge, but the Secretary denied him the franchise on the 
ground that he was not empowered to grant this permit or any other 
in Porto Rico. And we have been waiting also to see whether the 
governor of Porto Rico would succeed in getting legislation from 
Congress giving the executive council this power; and in all this 
constant waiting and waiting we have been losing time. So that, after 
having suffered great damages, we have come to ask this franchise, 
which would prove of great benefit to the trade and commerce of 
Porto Rico. 

When I .left the island a few weeks ago there were three sugar 
factories being built. They represent $5,000,000 of capital invested 
in lands and machinery. Those three factories are on the north 
coast of the island and on the line of the American railroad which 
runs to San Juan. In other words, those three factories will export 
their sugar to the United States by way of San Juan. The merchants 
there are now trying to find out how they are going to export that 
sugar in good condition with the means they now have. In Porto 
Rico it is an old drawback that the sugar has to be carried in those 
barges, and as a rule when it reaches the steamer it is all wet and in 
very poor condition, aside from the expense for the labor of conveying 
the sugar to the steamer and then hauling it from the barges on board 
ship. 

The Chairman. What you want to do, as I understand, is to build 
a covered pier ? 

Mr. Guerra. Yes, sir; a covered pier. And we propose to build a 
warehouse connected with it, a bonded warehouse, so that the mer¬ 
chants may leave their merchandise there for a certain time; and 
when they want to sell it they can carry it direct from the pier to the 
inland towns without having to go to the expenses of transferring the 
merchandise from the pier to their own warehouses and again from 
their own warehouses to the places where it is to be sold. I have 
brought a picture with me which gives a very good view and idea of 
the present wharf and pier at San Juan and of the bay, and I will 
show it to the committee, with the chairman’s consent. 

(Here the witness exhibited the picture referred to.) 

The Chairman. You say that this gentleman who seeks the fran¬ 
chise is of a firm which represents four steamship companies? 

Mr. Guerra. Yes, sir. 


236 


FRANCHISES IN PORTO RICO. 


Mr. Rucker. This pier that we see in that picture was built under 
a franchise granted by the Secretary of War ? 

Mr. Guerra. It was built under a permit given by General Davis 
during the military occupation of the island, and I think that it was 
afterwards confirmed officially by the War Department. 

Mr. Rucker. That pier is private property ? 

Mr. Guerra. Yes, sir. 

Mr. Larrinaga. Was there not some controversy between the ex¬ 
ecutive council and the War Department on account of that fran¬ 
chise? 

Mr. Guerra. No; the controversy or litigation that arose there was 
betwen the executive council, representing the people of Porto Rico, 
and the New York and Porto Rico Steamship Company regarding 
the validity of the franchise under which that company was operating 
the pier. 

Mr. Larrinaga. That franchise was granted by the military gov¬ 
ernor. The pier was a wooden one and it burned one day to the 
water’s edge in less than fifty minutes. Of course one of the greatest 
expenses of building such a wharf by that system was the driving in 
of the piles, which were very numerous, and that part from the surface 
of the water down represented a large amount of money. The com¬ 
pany sustained its right to the franchise and bought some cast-iron 
caps and put them on the stumps of the piles. I was trying to get 
from Mr. Guerra whether he remembers the particulars of that con¬ 
troversy that arose between the executive council of Porto Rico and 
the New York and Porto Rico Steamship Company. I believe that 
the ground upon which they based their contest was this, that the 
pier being burned, the franchise terminated, while the company 
claimed that what was left of the pier represented a large amount 
and that their franchise was not canceled. They won the contest. 

Mr. Guerra. If I mistake not, the Chamber of Commerce of Porto 
Rico adressed a petition to the Secretary of War begging him not to 
forfeit the franchise, because of the great need of commerce of having 
some pier. I think that it was solely on the ground of public policy 
that they allowed the company to have the pier there. 

Mr. Larrinaga. What was the point discussed between the execu¬ 
tive council and the company? 

Mr. Guerra. I do not know. 

Mr. Larrinaga. I know that there was something of that nature. 

Mr. Crumpacker. What is the attitude of the executive council in 
relation to this project? 

Mr. Guerra. The executive council as a body has not officially 
taken any action on the subject. Privately I have spoken to the 
attorney-general, Mr. Feuille, and also to the individual members of 
the executive council, and to Mr. Willoughby, the treasurer. Gov¬ 
ernor Winthrop gave me some letters recommending the project, in¬ 
cluding one to the Secretary of War. 

The Chairman. Have you that letter here ? 

Mr. Guerra. Yes, sir. 

Mr. Crumpacker. The governor knew you were coming here to 
frame this legislation, did he? 

Mr. Guerra. Yes. 

Mr. Crumpacker. You say that the company that owns the present 
pier occupies it mostly with its own business ? 


FRANCHISES IN PORTO RICO. 


237 


Mr. Guerra. Yes. 

Mr. Crumpacker. Do you know whether there are any discrim¬ 
inations against shippers at the pier there? 

Mr. Guerra. None that I know of. 

Mr. Crumpacker. They charge wharf fees, do they ? 

Mr. Guerra. Yes, sir; and they are very high, too. 

Mr. Crumpacker. Are there any discriminations or rebates in 
charges to shippers? 

Mr. Guerra. I do not know, sir. 

Mr. Crumpacker. There have been no complaints of that? 

Mr. Guerra. Yes, sir; there have been complaints of the rates 
being very high. I do not know whether or not- 

Mr. Crumpacker. Now, as the question of rebates in transporta¬ 
tion is an acute one in this country just at present, it appears to 
me that a section might be incorporated in this bill, if we recom¬ 
mend it to Congress, providing against any kind of discrimination, 
and prohibiting absolutely any kind of rebates or drawbacks in rela¬ 
tion to wharfage fees. 

Mr. Guerra. There is nothing to that effect in the bill. 

Mr. Crumpacker. There would be no objection to it, would there? 

Mr. Guerra. Not on my part; none whatever. 

Mr. Larrinaga. Rebates and discriminations in the charges of the 
company are a new thing entirely in Porto Rico. Of course, if a 
man knew that he was being charged more than anybody else he 
would claim that, but the people never thought that a person hold¬ 
ing a franchise would do anything like that. The general belief is 
that a person holding a franchise can do as he pleases, and they never 
thought that anything was morally wrong in that line, but they were 
always trying to find out whether somebody else was paying more or 
less than they were. 

Mr. Crumpacker. Do I understand you to say that they recognize 
the right of the holder of a franchise to do as he pleases ? 

Mr. Guerra. They would use it only as an argument to withdraw 
their patronage from him on that account. 

Mr. Crumpacker. I think that it would be a very wholesome thing 
to put a provision in that law prohibiting the granting of rebates 
and preventing discriminations, etc. 

Mr. Guerra. I believe you are right. 

Mr. Crumpacker. Have you that letter from the governor? 

Mr. Guerra. Yes. The letter is addressed to the Secretary of 
War, and reads as follows. 

The Chairman. What is the date of the letter ? 

Mr. Guerra. The letter was written on a date previous to Gov¬ 
ernor Winthrop’s return to this country in November. I thought 
that I would leave Porto Rico in the first days of December, and so 
I thought it better to get the letter from the governor before his 
return to this country. That accounts for its being dated November 
4, 1905. The letter reads: 

San Juan, November 4, 1905. 

The Secretary of War, 

Washington, D. C. 

Sir- I have the honor to introduce Mr. Miguel Guerra, of the law firm of 
Mott & Guerra, of San Juan. Mr. Guerra is endeavoring to secure permission 
to construct a wharf in the harbor of San Juan for the use of the various lines 
of steamships that visit this port. 



238 


FRANCHISES IN PORTO RICO. 


I do not know whether his plan will in any way conflict with the proposed 
scheme of the improvement of the harbor which is, I believe, to be studied 
by the War Department engineers, with a view of submitting the same for the 
consideration of Congress. If not, the plan would probably be of assistance to 
the shipping facilities of the island. 

Respectfully, Beekman Winthrop. 

The Chairman. This bill provides that all plans shall first receive 
the approval of the Chief of Engineers and of the Secretary of War, 
and that no changes or modifications therein can be made until the 
plans therefor are first authorized by the Chief of Engineers and the 
Secretary of War. 

Mr. Guerra. In case of any conflict, the Secretary of War will not 
approve the plans. 

Mr. Crumpacker. Now, as to these harbor charges, I confess a 
total lack of knowledge on that subject, but I suppose that there is 
no member of the committee who knows much about wharfage 
charges. The bill seems to give the right to this grantee to charge 
the rates fixed in the bill—the schedule of rates provided in the bill, 
and which lasts for ninety-nine years. They have a right to charge 
this as a maximum, and I infer that the Government would have no 
authority after having granted this franchise in this form to lower 
or reduce the maximum; and the question of wharfage rates strikes 
me as being a pretty important matter, if we are to fix it for so long 
a period. 

Mr. Guerra. There is a clause in the bill (sec. 4, p. 2). which pro¬ 
vides : 

That the wharfage fees and charges for goods loaded or discharged on, over, 
at, or from the wharf and pier shall be subject to regulation and revision, sub¬ 
ject, however, to the following provisions- 

Mr. Olmsted. Don’t you think that the rates given in the bill are 
outrageously high ? For instance, here is earthenware at $4 a ton (on 
p. 4 of the bill) ; guano in bales, $1.25 a ton; iron of all description, 
$1.50 a ton; bricks (common size), $1.75 a thousand, which is 20 per 
cent of the worth of the bricks. 

Mr. Guerra. I might have made a mistake there. I brought with 
me the schedule of wharfage fees of the railroad company of Porto 
Rico that are now charged in the island. 

The Chairman. On the only harbor you have, in San Juan? 

Mr. Guerra. Yes, sir. 

The Chairman. How do they compare with the schedule in this 
bill? 

Mr. Guerra. Ours are lower. I put them lower on purpose, in 
accordance with my firm’s orders to make them a little lower. 

Mr. Olmsted. Have you any idea what would be the cost of the 
erection of this pier? 

Mr. Guerra. It would cost something like $150,000. 

Mr. Crumpacker. This right to regulate only gives the right to 
regulate and revise upward. The bill provides that “ the grantee 
shall have the right to charge for goods loaded or discharged on, 
over, at, or from the grantee’s wharf and pier rates not exceeding the 
rates set forth in the schedule of charges hereinafter set out,” and 
then the grantee shall have the right to make such rules and regula¬ 
tions as he shall deem reasonable. 

Mr. Hubbard. If you fix those rates at present, then there should be 


FRANCHISES IN PORTO RICO. 


239 


a provision by which either the municipal or the island government 
would have the privilege of regulating these rates from time to time. 

Mr. Crumpacker. You are the attorney for Mr. Carlos Conde 
Casariego ? 

Mr. Guerra. Yes, sir. I am willing to omit all of the schedule of 
charges, and, as a general proposition, insert in the bill that the 
grantee may charge a maximum of 2J cents for a hundred pounds, or 
1 cent per cubic foot. 

Mr. Olmsted. For how long a time is this charge? For one day’s 
storage ? 

Mr. Guerra. As a rule it is just for one day. 

Mr. Rucker. If the goods were not taken away until the next day, 
the charge would be doubled. 

Mr. Guerra. No; just for a single day. 

Mr. Olmsted. How long could they leave these things lying on the 
pier for this charge ? 

Mr. Guerra. That would be according to the agreement between 
the importer and the grantee. 

Mr. Olmsted. I mean according to this charge. 

Mr. Guerra. That would be for one day. 

Mr. Olmsted. If they stay two days they have got to pay the 
charge over again unless the owner of the pier gives them a lower 
rate. 

Mr. Guerra. That is right. 

Mr. Olmsted. At the rate of $4 a day for a ton of iron, if it stayed 
there three days the charges would be $12. 

The Chairman. Mr. Olmsted, what did you say about iron? 

Mr. Olmsted. I should say that iron is $1.50 a ton. It is earthen¬ 
ware that is $4 a ton. There is nothing in this bill as to the period 
of time the charges cover. 

Mr. Crumpacker. I suppose it is for receiving and loading or un¬ 
loading at the wharf one at a time, and I presume they are allowed 
a reasonable time. The grantee then has the right to fix the regula¬ 
tions respecting the length of time beyond which the goods can be 
left on the wharf without a cost charge. 

The Chairman. The island is only 90 by 40 miles, and there is not 
much excuse for a man leaving goods there very long. 

Mr. Larrinaga. I guess they try to compel the people to clear 
away the goods. These charges are for the loading or unloading of 
the goods from vessels there. 

Mr. Olmsted. Does it include any service on the part of the owner 
of the pier? He does not help to unload the goods or pay the ex¬ 
pense, does he ? 

Mr. Guerra. Oh, yes. He pays the laborers for unloading from 
or loading in the vessels. 

Mr. Page. The expense is on the wharf owner for either loading or 
unloading? 

Mr. Guerra. Yes, sir. 

Mr. Larrinaga. I never knew anything about business of this char¬ 
acter, but $1.50 a ton for iron seems an enormous charge, while 75 
cents for bricks does not seem so high. 

Mr. Hubbard. Have you any clay for brick making? The first 
section of the bill provides that the United States Congress shall 
“ authorize Carlos Conde Casariego, his heirs, successors, and assigns, 


240 


FRANCHISES IN PORTO RICO. 


to construct and maintain in the harbor of San Juan, upon and adja¬ 
cent to certain lands belonging to the government of Porto Rico, 
lying and situated on the north side of said harbor, a wharf and pier 
and such other structures as may be used in connection therewith,” etc. 
What authority has the Congress of the United States to authorize 
construction upon any lands belonging to the government of Porto 
Rico? We have ceded those lands absolutely, haven’t we? 

The Chairman. Not the harbor waters. 

Mr. Hubbard. But this is not limited to that. The bill reads, “ to 
construct and maintain in the harbor of San Juan, Porto Rico, upon 
and adjacent to certain lands belonging to the government of Porto 
Rico.” 

The Chairman. There is a certain reservation there. 

Mr. Guerra. The shore line belongs to Porto Rico. 

Mr. Hubbard. That is evidently shore line; so we have no authority 
over those lands at all. 

Mr. Guerra. The language of the bill is “ to construct and maintain 
in the harbor of San Juan, Porto Rico, upon and adjacent to certain 
lands,” etc. 

Mr. Hubbard. Yes; but it is “upon and adjacent to.” On lands 
“ adj acent to ” we might have the authority, but we certainly have 
not authority to construct wharves or approaches on somebody else’s 
land. The land of Porto Rico belongs to it, not to the Government 
of the United States. So that necessarily for your approaches you 
would have to go to the government of Porto Rico. 

Mr. Crumpacker. The authority, we give can only go as far as we 
have power to grant it. 

The Chairman. Say “ the lands belonging to the United States 
under the waters,” etc. 

Mr. Hubbard. Those would be limited simply to the lands within 
the harbor area and the submerged lands which underlie these areas. 
We have no right to touch the land of Porto Rico, yet this bill grants 
an express right. 

Mr. Jones. Strike out the word “ upon ” and use the words “ ad¬ 
jacent to.” 

Mr. Olmsted. Is there much room for piers, or is the area con¬ 
tracted ? 

Mr. Larrinaga. It is not very contracted now. There are only 
about 230 yards, and then about as much more is not finished. 

Mr. Olmsted. Would it not be better for the government of Porto 
Rico to charge for the use of them ? 

Mr. Larrinaga. It is a very wide proposition for government own¬ 
ership. It was never in the idea of the government of Porto Rico, 
but I think it is coming. There is a necessity for the wharf provided 
for in this proposed franchise, because the New York and Porto 
Rican Steamship Company to-day has an absolute monopoly. 

Mr. Olmsted. Will you‘let us have the comparison with the rates 
you said you have there of the company that is operating the present 
pier ? 

Mr. Guerra. It is in Spanish. 

Mr. Olmsted. Is it a schedule of wharf charges ? 

Mr. Larrinaga. Whose rates are they? 

Mr. Guerra. The American Railroad Company. Everythino- con¬ 
nected with that company is very high priced. 





FRANCHISES IN PORTO RICO. 


241 


Mr Hubbard. Do you follow the same schedule as is followed 
there? Do you take the same order? 

Mr. Guerra. No; it does not correspond. 

Mr. Larrinaga. “ Manure and fertilizers in bags, 2| cents.” 

Mr. Crumpacker. What do you mean by that—for each ton? 

Mr. Larrinaga. For each bag. 

Mr. Crumpacker. How many pounds in a bag? 

Mr. Jones. There are 200 pounds in a bag. 

The Chairman. For guano in bales there is a wharfage charge in 
this bill of $1.25 a ton. How does that compare with the schedule of 
rates you have there? It is about five times as much, is it not? 

Mr. Larrinaga. You have here $1.50 a ton for iron. This schedule 
of storage charges of the American Railroad Company Is for a month 
or fractions of a month. 

Mr. Crumpacker. That is for storage charges? 

Mr. Olmsted. That is for wharfage charges—for keeping the goods 
on the docks. What we want to know is the wharfage charges—not 
the warehouse charges. 

Mr. Guerra. They do not have any wharfage charges. 

Mr. Page. The owners of the present wharf do not have any 
charges? 

Mr. Guerra. Yes; they have; but I have not a printed copy of 
them. I would suggest that the whole schedule of charges be 
omitted from the bill. I myself am willing to amend the bill so that 
the rates that may be charged be those that are actually charged in 
Porto Rico, subject to regulation and revision by the executive 
council. 

Mr. Hubbard. Suppose that during the present session of Con¬ 
gress we should pass a bill giving some definite authority to either 
the Secretary of War or to the executive council of Porto Rico to 
authorize the granting of franchises of this character, and to regu¬ 
late such franchises; would that not in large part really accomplish 
what you wish? 

Mr. Guerra. Yes; it would. 

Mr. Crumpacker. If the committee think it necessary that some 
legislation ought to be had on the question of charges, we could pro¬ 
vide against discriminations and rebates, and provide that the charges 
should be reasonable and subject to certain regulation and revision 
by the executive council. We could cover that question all right and 
leave out this formidable schedule here in the bill. 

Mr. Olmsted. Is there any way in which we can get hold of the 
schedule of charges made by the present steamship company operat¬ 
ing the pier and wharf ? 

Mr. Guerra. Yes; I could give you this information in about two 
days’ time, by just writing to New York for it. The company has 
its headquarters in that city. They have typewritten copies of the 
schedule of charges posted on their wharves. 

Mr. Crumpacker. You can get the schedule from the Commissioner 
of Navigation in this city. I think that it is necessary to get some 
information on this subject. 

Mr. Guerra. I was given a note before leaving Porto Rico, in 
which my client says that if the schedule should prove troublesome, 
35815-08-16 


242 


FRANCHISES IN PORTO RICO. 


as I am not familiar with such charges, to put in the bill that the 
grantee may charge 2£ cents per pound- 

Mr. Olmsted. That would be $50 a ton. 

Mr. Guerra. That is, for a month; or 1 cent per cubic foot. 

Mr. Olmsted. Two and one-half cents a pound? 

Mr. Guerra. Two and one-half cents a pound, or 1 cent per cubic 
foot. 

Mr. Olmsted. Two and one-half cents a pound is more than iron 
is worth. 

Mr. Guerra. But the charges on iron would not be 2J cents a 
pound, but 1 cent a cubic foot, and a cubic foot of iron weighs 
nearly- 

Mr. Rucker. Which way would they collect the charges on iron? 
I should imagine that they would be apt to collect the charges by 
the pound on iron and by the cubic foot on feathers. 

Mr. Crumpacker. It should be provided that the charges be rea¬ 
sonable and subject to regulation and revision. 

Mr. Olmsted. If we should grant you this franchise, you might 
sell it. 

Mr. Guerra. No, sir; we are not getting the franchise to sell it. 
We are getting the franchise to build a pier and we are going to 
build it. A clause may be put in the franchise that no other ship¬ 
ping company be allowed to hold any stock in this company. I am 
willing to have that done. I am willing to have a clause inserted 
providing that no other company or any company interested in 
shipping shall have an interest in this one. 



CONSTRUCTION OR WHARVES, PIERS, ETC., IN THE 
ISLAND OF PORTO RICO. 


Committee on Insular Affairs, 

House of Representatives, 

Friday , April 13, 1906. 

The Committee on Insular Affairs met at 10 a. m., Hon. Henry 
Allen Cooper in the chair. 

The Chairman. We have a hearing this morning on the bill of Mr. 
Parsons—H. R. 18077. 


STATEMENT OF MR. MIGUEL GUERRA-MONDRAGON, ATTORNEY- 
AT-LAW, OF SAN JUAN, P. R. 

Mr. Guerra. Mr. Chairman and gentlemen of the committee, I am 
very thankful and glad that through Mr. Cooper’s courtesy an op¬ 
portunity has been given me to appear before you this morning in 
regard to H. R. 18077 introduced yesterday in the House of Rep¬ 
resentatives by Mr. Parsons, of New York. In connection with this 
bill I will begin by saying that it was, no doubt, introduced as a sub¬ 
stitute bill for that which Mr. Larrinaga, on February 21, intro¬ 
duced in the lower House, through my request, entitled “A bill grant¬ 
ing to Carlos Conde Casariego a franchise to build, maintain, and 
operate a wharf and pier in the harbor of San Juan, Porto Rico, and 
for other purposes.” 

It is not my purpose to come before you to criticise the bill lately 
introduced on the subject of the navigable waters of Porto Rico. I 
would not be understood that I pretend to be able to judge the said 
bill form a technical, political, or legal standpoint of view. But, gen¬ 
tlemen, the measure which you are about to consider this morning- 
bears so much importance to the material progress, to the commerce, 
and to the future of the island, that in spite of my lack of ability to 
express myself in the English language, I can not refrain from en- 
deavoring to succinctly and briefly analyze the said bill, bringing into 
relief the salient features of which, were the bill to be passed, would 
operate as a drawback rather than as an advance to better the actual, 
disastrous condition of the shipping facilities of the island. 

I want to speak of this matter and to endeavor to impress upon you 
all the fact of the pressing necessity, deeply felt by the commerce of 
the entire country, to have wharves and piers in ready and prompt 
operation. 

And right here I will candidly and sincerely state that I do not 
approach the question from a political standpoint of view. It is as 
a Porto Rican jealous of the welfare of his country, and not as an 
attorney defending his own side of the case, that I am prompted to 
make the following statement: 

Gentlemen, it was under section 7 of an act of July, 1892, and 
under the authority conferred by sections 9 and 10 of an act of Con¬ 
gress of March 8,1899, more commonly known to the profession as the 
u harbor and river act,” that I petitioned for a franchise in favor of 

243 



244 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Concle to build, maintain, and operate a wharf and pier in the 
harbor of San Juan. 

The Chairman. I have page 994. 

Mr. Guerra. The act you refer to, Mr. Chairman, is in some way 
amendatory of the main act, from which I am reading. 

The Chairman. It is the act of March 3, 1899 ? 

Mr. Guerra. No, sir; it is the act of July 13, 1892. I will refer to 
that later, Mr. Chairman. Section 7 says: 

It shall not be lawful to build any wharf, pier, dolphin, boom, dam, weir, 
breakwater, bulkhead, jetty, or structure of any kind outside established harbor 
lines, or in any navigable waters of the United States where no harbor lines are 
or may be established, without the permission of the Secretary of War, in any 
port, roadstead, haven, harbor, navigable river, or other waters of the United 
States, in such manner as shall obstruct or impair navigation, commerce, or 
anchorage of said waters; and it shall not be lawful hereafter to commence the 
construction of any bridge, bridge draw, bridge piers and abutments, causeway, 
or other works over or in any port, road, roadstead, haven, harbor, navigable 
river, etc. 

The spirit of this law is, of course, to give to the Secretary of War 
the power to grant those concessions or permissions- 

The Chairman. I have just gotten a copy of the Mann bill, enacted 
into law and approved March 23,1906, but I find that it applies exclu¬ 
sively to bridges, and does not touch the matter of the construction of 
wharves, piers, bulkheads, etc. * 

Mr. Guerra. Section 9 of the act of March 3,1899, reads as follows: 

That it shall not be lawful to construct or commence the construction of any 
bridge, dam, dike, or causeway over or in any port, roadstead, haven, harbor, 
canal, navigable river, or other navigable water of the United States, until the 
consent of Congress to the building of such structures shall have been obtained, 
etc.— 

Giving, of course, the provision under which the permission to con¬ 
struct such bridges, dams, etc., is allowed. In other words, giving 
the Congress of the United States the power to grant permissions for 
the construction of such bridges, dams, etc. 

Section 10 of the same act reads as follows: 

That the creation of any obstruction not affirmatively authorized by Congress 
to the navigable capacity of any of the waters of the United States is hereby 
prohibited; and it shall not be lawful to build or commence the building of any 
wharf, pier, dolphin, boom, weir, breakwater, bulkhead, jetty, or other struc¬ 
tures in any port, roadstead, haven, harbor, canal, navigable fiver, or other water 
of the United States, outside established harbor, lines or where no harbor lines 
have been established, except on plans recommended by the Chief of Engineers 
and authorized by the Secretary of War, etc. 

Let us consider both sections 9 and 10 together. Section 9 expressly 
and clearly confers on the Congress of the United States the power 
to grant privileges for the construction of bridges, etc. It is under 
that section that numerous enactments are daily passed authorizing 
the railroad companies to build their bridges. I have a copy of these 
laws here. In like spirit, section 10 of the same act gives"the Con¬ 
gress of the United States the power to grant similar permissions to 
construct wharves, piers, etc., in the navigable waters of the United 
States, since it provides that “ unless an affirmative authorization is 
obtained from Congress ” no obstructions, like wharves and piers, can 
be built. 

It was under the third section I have just read that I applied on 
February 21, 1906, for a franchise for Mr. Carlos Conde Casariego, 



HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 245 

who, as Governor Winthrop knows, is a banker of Porto Rico, a man 
of enterprise, and the sole agent for the island of Porto Rico of the 
Red “ D ” Line of steamers, the Herrera Line, the Norton Line, and 
the River Plate and Cuba Line of steamers. 

The Chairman. Four lines of steamers. 

Mr. Guerra. Four lines. Previous to my petition the chairman 
had introduced a bill in the House delegating the power that Con¬ 
gress had to grant these franchises to the Secretary of War. You 
gentlemen all know that I had the honor of appearing before this 
committee and made a statement in support of Mr. Conde’s bill, and 
that the chairman appointed a subcommittee to report on the same. 
The subcommittee, instead of thinking it proper to submit a report on 
my bill, condensed their opinion through their spokesman, Mr. Par¬ 
sons, who introduced the bill under consideration, empowering the 
government of Porto Rico to authorize the construction of wharves, 
piers, etc., in the harbors and navigable waters of that island. It 
seems to me that undoubtedly the author of this bill (H. R. 18077) 
was not present at the time when I so poorly, weakly, and feebly 
tried to impress on the committee the necessity, so deeply felt by our 
commerce, of having at least one more pier constructed in the harbor 
of San Juan. 

Mr. Parsons. I have carefully read all your testimony. The bill 
that I have introduced the subcommittee is not responsible for. I 
simply introduced it as something to work on. May I ask a question 
at this point? You spoke of your application. Did you mean your 
application through Mr. Larrinaga, or did you mean an application to 
the Secretary of War? 

Mr. Guerra. My application through Mr. Larrinaga. I did not 
make any application to the Secretary of War. I verbally applied to 
the chairman, Mr. Cooper, and to Mr. Larrinaga, and it was at my 
request that Mr. Larrinaga introduced the bill in the House. 

I have no doubt that in framing this bill (H. R. 18077) its author 
was not fully aware that a monopoly disastrous to the shipping in¬ 
terests of Porto Rico is being carried on there. Governor Winthrop 
has, in my presence, told the chairman of the existence of this 
monopoly in San Juan. He advocates the building of not only one, 
but of two or three or more piers in that harbor. The struggle for 
transportation and for the loading and unloading of cargoes is a 
hard one. The companies that are fighting for supremacy in trans¬ 
portation lines 'in Porto Rico are contesting with unequal weapons, 
the New York and Porto Rico Steamship Company owning the only 
pier in Porto Rico and in the harbor of San Juan. 

Mr. Gilbert. Would it be satisfactory for the government of Porto 
Rico to make whatever leases may be necessary for the construction of 
these additional wharves ? 

Mr. Guerra. Yes; and it would fill a necessity there. To-day 
there is no authority outside of the Congress of the United States that 
can grant those permissions, and all Porto Ricans interested in the 
welfare of the country would with gladness accept any measure tend¬ 
ing to give that power to some branch of the National Government. 
For instance, a measure by which the granting of such permissions 
would not be very costly and one by which it would not take so long a 
time to obtain them. 


246 HEARING BEFORE HOUSE COMMITTEE ON INSULAE AFFAIES. 

Mr. Gilbert. Do you want it to be granted directly by the Con¬ 
gress here or by the government there? 

Mr. Guerra. So far as Impersonally, am concerned, I will say that 
the measure would not be a wise one if that power were granted to 
the government of Porto Rico, even under the restrictions contained 
in this bill. I am not appearing before you as a politician, nor am I 
the representative of any political party of the island, but I would 
like to say, in expressing my own sentiment as well as that of my 
country, that any extension of authority in addition to that most 
arbitrary one which our government already exercises under our 
organic law will in the future prove to be one more dangerous weapon 
that tyranny will brandish against us. 

We Porto Ricans have no confidence whatever in our government 
and administration, from a constitutional and political point of view. 
And from this point of view it is a faulty one. Our government there is 
good or bad, according to the governor ruling us. If the governor 
happens to be personally a gentleman and an upright, honest, pa¬ 
triotic citizen, then the government is good; but if, on the contrary, 
he happens to be a corrupt job seeker, a degraded character, unworthy 
of his country and of his flag, then our government is worse than 
• that of Russia. Of the three civil governors we have so far had, 
Governor Winthrop alone has been able to show our people that 
there are classes of Americans, from a political standpoint. No, 
gentlemen, we have no confidence in our form of government. 

The Chairman. Your criticism is that it is too much a government 
of men and not enough a government of law ? 

Mr. Guerra. Exactly. In other words, it is too much a govern¬ 
ment of a personal kind. Too many arbitrary powers are placed in 
the hands of the governor and of the executive council, directly con¬ 
trolled by the governor. Of course, if the governor be a man like 
Governor Winthrop, these powers will be used to the advantage of 
the country. The same thing is true with the government in Russia. 
Peter the Great was an ideal ruler. He stands out as one of the 
greatest and wisest rulers of the w r orld, yet he was a czar. As Sir 
William Meredith says: “ Not the man alone who feels it, but who is 
exposed to tyranny, is without freedom.” We are constantly exposed 
to it, and we have felt and undergone the not-distant days of the 
arbitrary administrations of Allen and Hunt. So far as I am con¬ 
cerned, I will say to you that when Governor Winthrop arrived in 
Porto Rico I said to myself: “ He must have been sent down here by 
mistake, he is so good a governor and man.” 

Mr. Rucker. Your idea is that it must have been a mistake, be¬ 
cause Governor Winthrop is a real good man. Do you think it was 
a mistake in sending those who preceded him? 

Mr. Guerra. That was not a mistake; it was an error. [Laugh¬ 
ter.] 

The Chairman. Do you think that the right to obstruct the navi¬ 
gable waters in the island of Porto Rico ought to be given to the 
government of the island, or should it be retained exclusively under 
the control of the War Department of the United States?" Is not 
the question of the strategic importance of the navigable waters and 
the control of them by* the United States Government of paramount 
importance ? 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 247 


^ r * Guerra. Yes, Mr. Chairman. That question, as raised by this 
bill, has two sides-—one of local importance to Porto Rico and the 
other of national importance to the United States. As far as the 
question of local importance to Porto Rico is concerned, I do not 
advocate the approval of this bill on account of the reasons I have 
stated before; and on the other point I do not feel so much at liberty 
to speak, it being a question of national importance. However I 
humbly beg to submit to you this: That by reason of its topograph¬ 
ical situation, right in front of the future Panama Canal and two 
or three days’ trip from any point in the Gulf of Mexico, Porto Rico 
occupies a strategic position similar to that of Gibralter in the Medi¬ 
terranean. I believe that from this point of view the National Gov¬ 
ernment should not in any way yield the direct control of the navi¬ 
gable waters of the island to the local government of Porto Rico, and 
that the control of the waters of the seaport cities should be given to 
some branch of the executive—say, to the Secretary of War—who 
at all times will be better able to know the national plans as to the 
obstruction of the navigable waters than would the local government 
of Porto Rico. 

The Chairman. Let me suppose a case. Suppose—as I do not 
think at all probable, but we are always to look to the future as 
though anything might be probable—suppose that a hostile local gov¬ 
ernment had control of affairs in the island of Porto Rico, and it 
were given authority, in its discretion, to permit the construction of 
wharves, piers, booms, etc., in the navigable waters and harbor areas 
of the island, could it not permit obstructions to be so built as to pre¬ 
vent the entry of naval vessels of the United States into the harbor? 

Mr. Guerra. Yes, sir. 

The Chairman. And, therefore, do you think that it would be 
wise for the War Department or for the Government of the United 
States, to surrender control of this particular matter to the local gov¬ 
ernment in the island of Porto Rico? 

Mr. Guerra. No, sir; I think that, judging this question from its 
national point of view, this Congressional authority should be given 
to some executive branch of the National Government; and, from 
our own.local point of view, I will say that our people would have 
more confidence in coming to the Secretary of War and directly ask 
for the granting of these franchises than to apply to the government 
of Porto Rico, which in the future might be an arbitrary one. They 
have more confidence in any branch of the executive of the nation 
than in the government of Porto Rico. The actual good government 
of Porto Rico might be a temporary one. We might be unfortunate 
enough to lose the class of Governor Winthrop’s forever. 

Mr. Gilbert. Suppose the United States should grant citizenship 
to the Porto Ricans and confer upon them the power of local self- 
government ; then would it not be in conflict with the theory of your 
local self-government to allow the Secretary of War to retain control 
of your harbors? 

Mr. Guerra. No; it would not, since it would be just the same as it 
is in this country. Every State of the Union has relinquished the 
control of their waters to the Congress. Congress, under the Consti¬ 
tution, is the only authority to regulate commerce and navigation. 


248 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Gilbert. Notwithstanding you want local self-government, 
you desire the control of the harbors to be the same as in this country ? 

Mr. Guerra. Yes, sir. 

Mr. Parsons. Do you understand that this bill of mine grants to 
the government of Porto Rico any more power than is now possessed 
by any of the different States of the United States ? 

Mr. Guerra. Yes; it does. The powers exercised in the United 
States by the several States are powers they exercise in their own 
waters—that is to say, in the waters within the particular State. 
The waters surrounding Porto Rico do not belong to Porto Rico. 
They used to belong and were the property of the Crown of Spain, 
and by the treaty of Paris they were ceded to the United States, and 
became a part of the public domain. This is a case of giving the 
property of the public domain to the government of Porto Rico. 

Mr. Parsons. But the result is that the government of Porto Rico 
under this bill would get nothing more than a State in the United 
States now has. Is that not so ? 

Mr. Guerra. More, I should say. 

The Chairman. Right in that connection I will read the proviso in 
section 9 of the act of March 3, 1899: 

Provided, That such structures may be built under authority of the legisla¬ 
ture of a State across rivers and other waterways, the navigable portion of 
which lie wholly within the limits of a single State, provided the location and 
plans thereof are submitted to and approved by the Chief of Engineers and by 
the Secretary of War before construction is commenced. 

That is a specific provision allowing the construction of bridges 
and other structures across rivers and other waters. 

Mr. Crumpacker. Wholly in the State. I think that section 10 
bears on this question. 

The Chairman. The witness read that. 

Mr. Guerra. In connection with this point, I will say that my 
chief objection to Congress delegating this authority to the govern¬ 
ment of Porto Rico, as provided for in Mr. Parsons’s bill, emanates 
from the fact that a monopoly exists in Porto Rico to-day. Under 
this bill this authority is granted to the government of Porto Rico 
at large; it provides that as soon as that authority is given to the 
government of Porto Rico— 

The government of Porto Rico shall make provision by general laws, subject 
to the restrictions mentioned in this act, to carry out the portions herein granted, 
and may delegate to any official or officials, department or departments, or local 
government or governments any or all shares in the powers hereby granted to 
the said government. 

In other words, if this bill were to be enacted into law, we would 
have to wait for at least a year to see what steps the Government 
authorities would take in order to carry out the provisions of this bill. 
The bill does not explain whether the word “ government ” means the 
executive council, the secretary of the interior, the governor himself, 
or the house of delegates, which is our lower house. 

The Chairman. Or the local government of San Juan. 

Mr. Guerra. Or the local government of San Juan, or of any other 
city. The main point that I want to impress upon you gentlemen of 
the committee is, in other words, that immediate and prompt action 
should be taken to permit an end being put to the monopoly now 
existing in Porto Rico, which is solely under the control of the New 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 249 

York and Porto Rico Steamship Company, of New York City. And 
this bill will tend to serve as an obstacle to the other companies. Of 
course we have not come here to ask for legislation to put a stop to the 
monopoly. This is merely incidental. We ask for this legislation 
because we need an additional pier. We represent four companies, 
and, as everybody in Porto Rico, or who has been there, knows, we 
have to use lighters to unload the cargoes from our vessels, at great 
expense and delay. 

The Chairman. Do you think that the people of Porto Rico would 
be content if we were to pass a law giving the authority to the Secre¬ 
tary of War? 

Mr. Guerra. Yes, sir. 

The Chairman. In some such manner as provided for in the bill 
which I have introduced, with the addition of some of the restrictions 
that are contained in Mr. Parsons’s bill ? 

Mr. Guerra. Yes, sir. We Porto Ricans are desirous of having as 
many rights as the Americans have. This bill gives us more rights 
than those the Americans have in this country. The State of New 
York or the State of Pennsylvania will, for instance, never have the 
sole and absolute control of their navigable waters, and we want to 
be just like the Americans. We are modest enough to want to be 
just on the same level with the Americans and nothing more. This 
bill will operate as an obstacle to our own enterprise. I feel now, 
since the bill was introduced, that I am about ten years further away 
from seeing any jDiers built in the harbor of San Juan. 

Mr. Parsons. You say that you do not know what those words 
“ the government of Porto Rico ” mean in my bill ? I took those 
words from the act of Congress passed July 1, 1902, which authorizes 
the reservation of public lands and buildings belonging to the United 
States in the island of Porto Rico for military, naval, light-house, 
marine-hospital, post-offices, custom-houses, United States courts, and 
other public purposes, as the President may deem necessary, and 
all the public lands and buildings, not including harbor areas and 
navigable streams and bodies of water and the submerged lands 
underlying the same, owned by the United States in the island, and 
not so reserved, and the granting of the same to the government of 
Porto Rico. I tried to use the same language. May I ask this 
further question? Supposing that we added to my bill a provision 
so that until the next session of the Porto Rican legislature either 
the executive council or, if you prefer, the Secretary of War, could 
grant rights to construct piers, etc.; would that meet your objections? 

Mr. Guerra. I am entirely opposed to either the executive council 
or the house of delegates ever having anything to do with this 
granting of franchises for the construction of wharves and piers. 
No matter whether we have a Porto Rican government with an 
elective senate instead of an executive council, and a house of dele¬ 
gates, both bodies composed wholly of Porto Ricans, I would be 
also entirely opposed to having this power granted to the govern¬ 
ment of Porto Rico. And I might say in regard to that law that 
the words “ government of Porto Rico ” therein mean the people 
of Porto Rico—the body politic—while in this bill it refers to the 
legislature, as it says “ that the government of Porto Rico shall 
make provision by general laws,” etc. 


250 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

The Chairman. What you said a while ago, referring to the act 
of Congress which Mr. Parsons mentioned, means the people of 
Porto Rico, and those lands belonged to the people of Porto Rico. 
That is the name of the island. 

Mr. Parsons. Then, how would the people to whom the lands were 
granted exercise their rights over the lands ? 

Mr. Guerra. Through the legislature of Porto Rico, composed 
both of the executive council and of the house of delegates. 

Mr. Parsons. Yes; that is what I intended by my bill. 

Mr. Guerra. But section 3 of your bill reads : 

That the government of Porto Rico shall make provision by general laws, 
subject to the restrictions mentioned in this act, to carry out the powers herein 
granted, and may delegate any official or officials, department or departments, 
or local government or governments any or all shares in the powers hereby 
granted to the said government. 

Under the Foraker Act the executive council alone can exercise 
the power to grant franchises, privileges, and concessions, and under 
this proposed act the sole authority to grant such franchises, privi¬ 
leges, and concessions might be granted on any branch of the govern¬ 
ment. As a general proposition, I am rather opposed to this author¬ 
ity being granted to the government of Porto Rico. We would be 
satisfied and contented that as soon as possible some action be taken 
by Congress to grant this authority to the Secretary of War. 

I will ask your permission, Mr. Chairman, to read some very short 
articles recently published in the newspapers of Porto Rico, wdiich 
will convey to the committee a good idea of the situation actually 
existing there. The first one that I will read is an extract from the 
Correspondencia de Porto Rico (the Porto Rico Mail). It is a report 
of one of the meetings of the executive council. Mr. Grahame, sec¬ 
retary of the interior, is reported and quoted as follows: 

Mr. Grahame. Shows to agree in everything with the auditor’s opinion and 
supports his contention by citing practical instances. He cites the case of a 
steamer that brought 10,000 pieces of cargo and finding no private pier on 
which to unload, had to make use of large lighters, with the result of excessive 
cost and delays. 

The only part of the city’s wharves where the unloading could be carried on 
results to be too populated, so that a cargo of coal, for instance, would be too 
prejudicial to discharge. 

There are not, therefore, enough wharves or piers, so that the vessels visiting 
this port have no facilities for their loading and unloading, this situation being 
too injurious to the island and to commerce. (From La Correspondencia de 
Puerto Rico, March 13, 1906.) 

The Chairman. From what paper is that you are going to read? 

Mr. Guerra. The same paper—the Porto Rico Mail. 

The Chairman. Of what date? 

Mr. Guerra. March 14, 1906. [Reading:] 

The plan to build a new pier in the harbor of the city is stirred. The said 
pier will be used by the steamers of those companies which do not enjoy that 
advantage for their loading and unloading operations. 

Mr. Parsons. That is your plan ? 

Mr. Guerra. That is my plan; but of course before being able to 
reach that goal we need to have somebody who can grant us that 
authority. If this authority be granted to the government of Porto 
Rico, aside from what I have said, it will mean great delay to us, 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 251 

because the legislature of Porto Rico has just adjourned. A year 
at least would pass before we would be able to build the pier. 

The Chairman. That amounts to a tax on the business of the 
island. 

Mr. Guerra. Yes, sir; it does. Now, here is a long article, and I 
will read just the heading. 

The Chairman. What is the paper, and what is the date ? 

Mr. Guerra. The same paper, the Porto Rico Mail, of October 28, 
1905. It says: 

Contract of transportation—The just, humane, generous, and equitable ones 
put in practice by the New York and Porto Rico Steamship Company—The 
traders of San Juan accept these conditions, but many think that such contracts 
would not stand a test before a court of justice—And many think also that the 
time has come for those contracts to disappear. 

The Chairman. To what contracts does that refer? 

Mr. Guerra. The contracts for transportation—the obligations 
undergone by the company in transporting cargoes. 

The Chairman. Let us get a few of those facts. What are some 
of them ? 

Mr. Guerra. I did not translate the entire article. It is in Spanish 
and rather difficult to translate right offhand. 

The Chairman. This is a condition which the New York and Porto 
Rico Steamship Company imposes on shippers? 

Mr. Guerra. That is just what it is. It provides that the loading 
will be at the expense of the consignees and shall constitute an in¬ 
cumbrance on the cargo. 

The Chairman. Making a lien on the cargo. 

Mr. Guerra. Yes, sir. [Reading:] 

As soon as the cargo has been unloaded the company will send the goods to 
their destination at the cost and risk of the owmer. 

Of course there is no charity there at all. 

The Chairman. How many of those conditions are there in all ? 

Mr. Guerra. There are about thirty of them. 

The Chairman. Please translate them all, and give them to the 
reporter. 

Mr. Guerra. Very well, sir. Here is a long article published in 
connection with certain action that was taken by the merchants of 
Ponce, P. R. 

The Chairman. What paper is it, and what date ? 

Mr. Guerra. The Porto Rico Mail. The date is not given. It is 
somewhere in the month of October of last year. 

The Chairman. Last year? 

Mr. Guerra (reading) : 

Merchants who protest against the “ N. Y. and P. R. S. S. Co.” have monopo¬ 
lized lighterage in Ponce and pretend to oblige merchants to use but the barges 
of only one company. 

Complaints of unjustified delays, of rough handling of cargoes, and of increases 
in the rates are formulated by the owners of the 80 per cent of the imports 
and exports of that city. , . , A 

An ultimatum to the company fixes one month within which to answer letter. 

Great many merchants of Ponce, amongst whom the 80 per cent of the 
trade of all imports and exports between this island and New Orleans and New 
York are embraced, have sent us the following circular: 

“ Due to the measure adopted in May, ultimo, by the ‘ New York and P. R. 
S. S. Co.’ exacting from shippers- 


252 HEARING BEFORE HOUSE COMMITTEE OH INSULAR AFFAIRS. 

The Chairman. Wait a minute. That was in May of last year? 
Mr. Guerra. Yes, sir [continues reading] : 

“ Exacting from shippers the exclusive use of the lighters of the * Commercial 
Lighterage Company ’ for the loading and unloading of cargoes, a monopoly of 
the lighterage has been formed, to the prejudice of our interests, increasing rates 
and rendering a deficient service. 

“And as we do not intend to any longer stand the loss that such a measure 
causes us, we have resolved to address a communication to the above-mentioned 
* N. Y. and P. R. S. S. Co.,’ as you will see by the inclosed copy we are sending 
to you. 

“ We beg to ask your kindness to use your influence with the ‘ S. S. Co.’ about 
our just petition. If within a month from the date of this circular we have not 
obtained a favorable reply we will embark our merchandise by sailing vessels 
while we are able to establish another line of steamers.” 

The inclosed document to which we refer, reads as follows: 

Ponce, P. R., October 17, 1905. 

The undersigned, importers of this locality, have resolved to address you this 
letter with the hope that this affair might be worthy of your immediate attention. 

This following letter was addressed to the New York and Porto 
Rico Steamship Company [continues reading] : 

When on the month of May last your company established the lighterage system 
for merchandise and cargoes in this port of Ponce, to be paid beforehand by 
the shippers, we immediately protested against such an arbitrary measure which 
was so prejudicial to our interests, explaining, at the same time, the reasons we 
had for our protest; and since our justified reasons did not merit your attention 
we did not insist any longer with the object of being able to prove that our objec¬ 
tions were legitimate and not a matter of prejudice. As our objections have 
proved to be true, by reason of the losses and inconveniences we have incurred 
into, we are duty bound to protect our interests in the future. 

Your system has given “ The Commercial Lighterage Company ” the monopoly 
of transportation; this company is the only one allowed to perform the unload¬ 
ing of your liners, and we, the importers, are suffering under an excess of car¬ 
goes and a deficiency in the service. Our goods have been unjustly delayed 
the majority of times, and the laborers have not been very careful as to handling 
of the cargoes. In short, if all of our respective firms had been allowed to do 
their own lightering, the result would have‘been more advantageous, since we 
would have obtained more promptness and better handling than the one to be 
had under your system. * * * This being the case, we do not consider just 

your increase in the rates, and we think that the importers should be left at 
liberty to avail themselves of the services of any company that would suit them 
best, and that they should be left at liberty to handle their own cargoes. 

In case of a denial to our petition, we, in self-defense and of our own interests, 
will give instructions to the shippers of our merchandise to avail themselves of 
sailing vessels. 

Respectfully. 

This was signed by 22 of the most important mercantile firms of 
Ponce. 

The Chairman. Do I understand that this steamship company, 
under the franchise which it recevied from the American Govern¬ 
ment, has a monopoly of the lighterage privileges ? 

Mr. Guerra. Yes, sir 

The Chairman. Now, in that connection, let me call your attention 
to the last section of this bill, on pages 4 and 5, which reads as fol¬ 
lows: 

That nothing herein contained shall be so construed as to affect any legal or 
equitable rights acquired by the government of Porto Rico or any other party- 
under any contract or license made by the United States authorities prior to the 
approval of this act. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 253 

In your judgment, if that section were enacted into law, would it 
permit this steamship company to exercise its present monopoly ? 

Mr. Guerra. Yes; it would, because the “ government of Porto 
Pico,” referred to in this section, is out of the question, because the 
government of Porto Rico, so far as this section is concerned, has 
not as yet received any privilege, license, contract, or lease. 

The Chairman. But it says “ any other party.” 

Mr. Guerra. It refers to any other party, and that party is bound 
to be the “ New York and Porto Rico Steamship Company,” there be¬ 
ing no other person or corporation in Porto Rico that so far has re¬ 
ceived a privilege of that nature. 

The Chairman. If this section were made a law, would it confirm 
anything in the monopoly that they now have ? 

Mr. Guerra. I believe so; and I might say that the framer of this 
bill did not have that in mind. 

Mr. Parsons. If that should be its effect, it certainly ought to be 
changed. I thought that I took that clause from some one of 
these acts relating to Porto Rico, so that it would not affect any grant 
heretofore given, and would not complicate matters. But if you 
should deduct from it that its effect would be that you could not do 
anything which would compete with the New York and Porto Rico 
Steamship Company, of course it ought to be changed. 

Mr. Crumpacker. I understand that this New York company is 
acting under no franchise granted by the Porto Rican government, 
and that it has the right to construct wharves without any condi¬ 
tions. 

Mr. Guerra. Exactly. 

Mr. Crumpacker. There is no reference to the legislature. If 
there is any lighterage monopoly it is incidental to the rights that this 
steamship company has as to the wharf and pier, and that it is now 
proposed to break up that monopoly, and that this bill secures only 
the rights that the company originally had from the military govern¬ 
ment of Porto Rico. 

Mr. Parsons. It does not-the right. 

Mr. Crumpacker. It was a right that was granted by the military 
governor, and acted upon by the company. It is without any limita¬ 
tions, and the company uses it as any other association might use it, 
as individual property and as a monopoly. 

Mr. Rucker. Recognition of the grant itself does not recognize an 
abuse of the powers granted thereunder. 

Mr. Crumpacker. Of course not. 

Mr. Parsons. I have found where I got that language. I got it 
from the first act of 1902, under which the United States reserves the 
right to some of the lands. There is a proviso which reads: 

That nothing herein contained shall be so construed as to affect any legal or 
equitable rights acquired by the government of Porto Rico, or by any other party, 
under any contract, lease, or license made by the United States authorities 
prior to the first day of May, nineteen hundred. 

I simply tried, in drawing the bill, to use language that had been 
used before. 

Mr. Crumpacker. The fact is that this bill would not abrogate the 
right which this company got from the military governor. 

The Chairman. Let me just say what I had in mind. This pier is 
in the harbor of San Juan. The monopoly of lighterage which the 


254 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

petition claims to exist is in the harbor of Ponce, across on the other 
side of the island, and is an entirely separate and distinct thing from 
this Other pier—about 40 miles from it. I could not understand from 
the wording of that petition how it would be possible for that steam¬ 
ship company to compel those people to do their lighterage on the 
lighters of the company, unless they have some authority -in law to do 
it. That same license was in the nature of an exclusive permit, be¬ 
cause otherwise those people would have had the right to take the 
cargoes off on their own boats. 

Mr. Parsons. They might say, “ We won’t carry anything on our 
lighters unless it is shipped on our line of steamers.” 

The Chairman. How many different lines of steamers enter the 
harbor of San Juan? About seven, I think. Does this company 
claim the right of lighterage for all these lines of steamers ? 

Mr. Guerra. Just from the importers of Ponce. A merchant, for 
instance, receives a consignment of 10,000 bags of flour from the 
United States, per any of the steamers of the New York and Porto 
Pico Steamship Company; and the steamship company will refuse 
the delivery of his cargo unless unloaded into and transported by the 
lighters of the company. As the New York and Porto Rico Steam¬ 
ship Company is the only company owning a pier in Porto Rico, so 
far as San Juan is concerned, the American exporters are obliged to 
use this line, because they know that when their cargo reaches Porto 
Rico it will be under cover and there will not be any delays and 
damages suffered. They know that they get better service from the 
New York and Porto Rico Steamship Company so far as the protec¬ 
tion and the prompt delivery of the cargo is concerned. What the 
other companies want is a pier to break up this monopoly. 

Mr. Crumpacker. They have the best wharf in San Juan Harbor? 

Mr. Guerra. They have the only one in San Juan. 

Mr. Crumpacker. I understand that there are docks around the 
bay that could be used for loading and unloading? 

Mr, Guerra. That can hardly be said. 

Mr. Crumpacker. Those docks are used some, are they notv 

Mr. Guerra. Yes; but they are hardly of any avail. As you have 
heard from the papers I just read, some steamers frequently do not 
find a place to discharge their cargoes. 

Mr. Crumpacker. This monopoly that you talk about is the result 
of the fact that this company has the best facilities down there ? 

Mr. Guerra. That is all. 

Mr. Crumpacker. And if authority be granted for the construc¬ 
tion of other piers and wharves this monopoly would be completely 
destroyed? 

Mr. Guerra. That is our contention. 

In this bill a very clear contradiction can be noticed. Section 2, 
paragraph a, reads: 

(a) No authorization to construct or extend any such structure shall extend 
for a longer period than thirty years: Provided , however , That it may provide 
that the government shall at the expiration of the period purchase or take over 
the same at a fair and reasonable valuation, or that at the expiration of such 
period the government may extend such authorization for a further period not 
exceeding thirty years. 

And then paragraph e of the same section reads: 

(e) That the structure may be purchased or taken by the public authorities 
at any time at a fair and reasonable valuation. 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 255 

Mr. Gilbert. Those two provisions are not necessarily in conflict. 
The Government here reserves the right to take private property for 
public use at just compensation without extending any rights to the 
corporation. 

Mr. Guerra. Then the thirty-year clause could be omitted and we 
could leave the general provisions only. I am willing to have it that 
way. 

Mr. Parsons. May I explain what the effect of that provision 
would be as drawn in my bill? Suppose the desired provision was so 
worded as to provide for a lease of thirty years and that at the end 
of that time the government of Porto Rico could take the property at 
a fair and reasonable valuation, and then suppose that for some rea¬ 
son after fifteen years or so the government of Porto Rico wanted to 
take the property it could do so. It could take property a franchise 
for which had been granted for thirty years and which the govern¬ 
ment of Porto Rico was to take at the end of thirty years. I mean 
that there would be an element in the valuation there. 

Mr. Guerra. That would operate as an obstacle to having anybody 
accept this franchise. 

Mr. Gilbert. Thirty years would mean the maximum limit of the 
cession of the franchise that the government had conferred upon the 
grantees. 

Mr. Guerra. The result would be that nobody would accept a fran¬ 
chise under this proposed law. I say that, because under this bill no 
man would be certain of what he was getting. He would not know 
whether he had obtained a right to enjoy the investment of his money' 
for two years or for thirty years or whether the government might 
want to take his pier and not the other pier. The other company 
might remain there and do business and the government buy the other 
franchise at a fair and reasonable valuation. 

Mr. Parsons. Supposing we left the provision as set forth in sub¬ 
division “ e ” of section 2, the government of Porto Rico could take 
the pier, if authorized by Congress, by condemnation, even though 
there was a thirty-year provision in the franchise. 

Mr. Guerra. Yes. 

Mr. Parsons. So that, as a matter of fact, even though that sub¬ 
division “ e ” was in, any other pier could be taken. 

Mr. Crumpacker. The pier could be taken only for public use. 

Mr. Parsons. To be operated by the government. 

Mr. Crumpacker. I do not know about that. You must bear in 
mind this, that a pier in any harbor is always dedicated to the public. 
A railroad can not be condemned for public purposes. I say railroad 
property because it is already public property in the sense of con¬ 
demnation by law. You can not take property by condemnation 
proceedings for public purposes if it be already used in the per¬ 
formance of public functions, and it appears to be public property 
in the sense of a common carrier. I doubt very seriously whether 
that authority could be conferred upon the Porto Rican government, 
to take away the property. 

Mr. Parsons. If the legislature had the power to pass a con¬ 
demnation law, it would provide that the government could condemn 
the property, even though it belonged to a quasi-public corporation, 
so that the government could operate it. 


256 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Crumpacker. The government could against the will of a rail¬ 
road company condemn and take over their property for the purpose 
of operating it by the government? That is a pretty large question, 
and I would not want to give an opinion on it now. 

Mr. Gilbert. Have you formulated what you think ought to be the 
bill instead of the one reported by the subcommittee ? 

Mr. Guerra. If I might be allowed to formulate a bill, I will do so. 
My idea is to draw a bill to empower the Secretary of War to grant 
these franchises with certain restrictions. 

Mr. Gilbert. Have you put the bill in writing ? 

Mr. Guerra. No. But I will do so. 

The Chairman. I think that we will now suspend, as the commit¬ 
tee desires to go into executive session and discuss the bill. 

Mr. Guerra. I have an amendment here by which when a fran¬ 
chise is granted to any parties the grantees are subject, first, to give 
to the insular treasury a royalty of 2 per cent of all gross receipts 
from wharves and piers; and second, that the grantees shall execute 
a bond to the treasurer of Porto Rico for the faithful fulfillment of 
the plans submitted by them to the Secretary of War. This bill 
which we have been discussing provides in paragraph “ g ” of sec¬ 
tion 2: 

That the said structure shall not be sublet, nor shall the authorization be 
assigned without the consent of the said government of Porto Rico. 

Now, I object to that provision, because the taking of the right oi 
assignment from the holder of any franchise amounts to the same as 
the taking of the right of assignment from the holder of a note. The 
result would be to render the note worthless. I am willing that it 
provide that the authorization can not be assigned more than once. 

Mr. Parsons. If you allow the franchise to be assigned without tht> 
consent of the government of Porto Rico, it might be assigned to 
the New York and Porto Rico Steamship Company. If you pass a 
general law, you can not mention names. It seems to me that that 
was just the point that the spirit of the clause is designed to meet. 
The local authorities would know what was intended to be done. 
You could obviate the possibility of the franchise being assigned to 
the New York and Porto Rico Steamship Company by saying “ any 
other company controlling any other structure in the harbor, etc.” 

Mr. Guerra. I will say in the name of my client that if this bill 
should be enacted into law I would rather withdraw my petition than 
go back to my country with a feeling of having done an injustice to 
Porto Rico by having advocated a measure harmful to the island. If 
the power of granting franchises should be given to the Secretary of 
War matters would be greatly expedited. However, if this bill be 
passed I will withdraw my petition and bow to the inevitable. 

Mr. Parsons. Are there any more of these specific restrictions to 
which you object ? You have already mentioned a number of those 
to which you object. Are there any more? I want to know just for 
my information. 

Mr. Guerra. I have here an amendment. 

Mr. Rucker. Suppose you leave that with us. 

Mr. Guerra. Yes, sir; I will do that. I have suggested in the first 
clause that after general authority to grant the franchises is conferred 
upon the Secretary of War, the said authorizations shall be of no 


HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 257 

force or effect until the government of Porto Rico has authorized the 
grantee thereof to use and occupy the lands upon which the struc¬ 
tures are to be built. 

Mr. Rucker. In that case you would have to wait for the legisla¬ 
ture to meet. 

Mr. Guerra. No; under the Foraker Act the executive council has 
the sole authority to grant such rights. 

The Chairman. Then you would not use the word “ government.” 
You would say u the executive council.” 

Mr. Parsons. After all we have heard about the executive council, 
I was particular to give this right to the government. 

Mr. Crumpacker. The executive council down there is what the 
Speaker of the House is here. 

Mr. Guerra. It is something like the Committee on Rules. 
[Laughter.] 

Mr. Parsons. What is the depth of the harbor of San Juan? 

Mr. Guerra. I could not tell you. I have plans of all the. sound¬ 
ings of the harbor, that were taken for the purpose of asking for this 
franchise. 

Governor Winthrop. The depth is 24 feet. That is the maximum 
depth. 

Mr. Parsons. Is it that deep right up to the shore line ? 

Governor Winthrop. No: only in portions. 

(At this point the committee went into executive session.) 


Exhibit A. 

[From the Correspondence de Puerto Rico, March 18,1906.] 

Thousands of pieces of cargo lying on the shore . 

The steamer Massapequa brought from the United States 35,000 pieces of 
cargo and has been unloading three days and nights. 

The said steamer could not unload her cargo on the railroad company’s wharf 
on account of its being congested. 

The steamer Massapequa is doihg most of its unloading operations by means 
of lighters and barges. 


Exhibit B. 

"News that caused a sensation in New York—The case had some features worthy 
of public comment—A company does not leant to fairly meet the good will of 
Porto Rican commerce and of Porto Rican laborers. 

The news that reached New York in regard to a certain strike of laborers 
which recently occurred in San Juan produced quite a sensation amongst many 
persons and especially amongst financiers of good foresight who know how to 
make the best of opportunities. 

In truth, the case presented some features worthy of comments. Laborers, 
asked for an increase in their wages, and for some days there were certain diffi¬ 
culties that arose between the merchants and the laborers of San Juan. The 
most bitter resistance was made by a navigation company called the New 
York and Porto Rico Steamship Company. This company had built a certain 
pier about which there was some litigation with the people of Porto Rico, 
pretending to claim as legal a grant made by the military government when the 
island was on a civil rule. 

35815—08-17 




258 HEARING BEFORE HOUSE COMMITTEE ON INSULAR AFFAIRS. 

So far there is nothing new. Workingmen are asking higher wages to meet 
their domestic necessities; merchants are carefully studying the margin they 
can give the petitions of the laborers, and there is a company that would have 
enforced as legal a military order had it not been for the opportune opposition 
of the civil government. 

Men of good will formed a committee of intervention, and after much labor 
and many efforts there was the magnificent spectacle to witness, the agreement 
reached by both laborers and merchants. That is to say, capital and labor shook 
bands and subscribed to a peace that merited the approval of all. 

That deed of union was communicated to the New York and Porto Rico 
Steamship Company. This company declined to subscribe to the agreement. 
The company that lives on its business and on the Porto Rican traders and 
laborers would not fairly meet the merchants, supporters of its business, and the 
laborers who work in its pier. 

Naturally, the foresight of some American financiers made them see that the 
possibility of splendid business was coming, and according to our information 
the plans for the establishment of new lines of navigation in Porto Rico are 
rigorously certain. 


59th Congress, | HOUSE OF REPRESENTATIVES, j Report 

1st Sessitm. ) | No. 8629. 


I 


CONSTRUCTION OF WHARVES, PIERS, ETC., IN PORTO 

RICO. 


April 26, 1906.—Committed to the Committee of the Whole House on the state of 
the Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 

submitted the following 

REPORT. 

[To accompany H. R. 18502.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 18502) to empower the Secretary of War, under certain restric¬ 
tions, to authorize the construction, extension, and maintenance of 
wharves, piers, and other structures on lands underlying harbor areas 
and navigable streams and bodies of waters in or surrounding Porto 
Rico and the islands adjacent thereto, beg leave to report that they 
have had the same under consideration and recommend that said bill 
do pass with the following amendment, to wit: 

Strike out all after the enacting clause and insert the following: 

That the Secretary of War be, and he is hereby, empowered, subject to the restric¬ 
tions and under the conditions hereinafter mentioned, to authorize the construction, 
extension, and maintenance of any wharf, pier, dolphin, boom, weir, breakwater, 
sea wall, bulkhead, jetty, or other structure on any of the lands belonging to the 
United States which underlie the harbor areas and navigable streams and bodies of 
waters in or surrounding Porto Rico and the islands adjacent thereto and the filling 
in and dredging of such lands. 

Sec. 2. That the word “person” as used in this act shall be construed to import 
either the singular or the plural, as the case demands, and shall include individ¬ 
uals, municipalities, quasi-municipal corporations, corporations, companies, and 
associations. 

Sec. 3. That the powers granted in the foregoing section shall be subject, however, 
to the following restrictions: 

(a) No authorization to any person to construct, extend, or maintain any such 
structure shall continue for a longer period than the period set forth in such author¬ 
ization, and shall provide that the Government of the United States or the govern¬ 
ment of Porto Rico shall have the right at any time after the expiration of thirty 
years from the date of such authorization, and after three months’ notice, to take any 
such structure from the owner thereof upon paying the value of the same at the time 
it shall be so taken, and the amount paid shall not exceed the original cost of the 
same as may be fixed under paragraph (f) hereof. 


259 







260 


WHARVES, PIERS, ETC., IN PORTO RICO. 


In case the Government of the United States or the government of Porto Rico 
should claim that the value of the structure when seized and taken is less than its 
original cost, the extent of deterioration or diminution from the original value shall 
be determined by a board or commission of four members, two of whom shall be 
appointed by the Government of the United States or the government of Porto Rico 
and two by the owner of such structure. If the four members thus chosen and 
appointed shall not be able to agree, they shall choose by mutual agreement a ref¬ 
eree, whose decision shall be final, but in no case shall the amount to be paid exceed 
the original cost as fixed under the provisions of said paragraph (f). If the four 
members thus chosen and appointed are unable by mutual agreement to select a ref¬ 
eree, then the Chief of Engineers of the United States Army shall be the referee, and 
his decision shall be final. 

All authorizations granted by the Secretary of War for any such construction, 
extension, or maintenance— 

(b) Shall be subject to alteration, amendment, or repeal by Congress; 

(c) Shall provide that the wharfage fees and charges for vessels, for passengers, 
and for goods loaded or discharged on, from, at, or over any such structure, and for 
approach and entry to any such structure, shall be no greater than are just, reason¬ 
able, and fairly remunerative, and for that purpose shall at all times be subject to 
regulation and revision by the said Secretary of War; that such fees and charges 
shall be the same for all persons, and all persons shall have equal right to approach, 
enter, and use the said structure, subject to such reasonable rules and regulations as 
the grantee thereof may establish, all of which rules and regulations shall be subject 
to revision by the Secretary of War; 

(d) That all necessary dredging in or in connection with the said structure, or the 
use thereof, shall be made by the grantee of the authorization; 

(e) That such authorization shall be null and void unless actual construction shall 
be commenced within one year from the date of such authorization by the Secretary 
of War and completed within three years from the date of such authorization, or 
within such lesser periods as may be therein fixed: Provided , That the Secretary of 
War may, for due cause shown, extend the time for the completion of such construc¬ 
tion for a reasonable period; 

(f) That duly verified accounts of expenditure for the construction, extension, or 
improvement of such structure shall be exhibited to and filed with the United 
States Army engineer at the city of San Juan, Porto Rico, who shall report to the 
Secretary of War the entire cost of such structure, extension, or improvement to be 
built under such authorization; 

(g) That the said structure shall not be sublet, sold, transferred, or assigned, nor 
shall the authorization thereof be sold, transferred, or assigned without the consent 
of the Secretary of War, nor in any case to a person engaged, directly or indirectly, 
in the same line of business, and that any subletting, sale, transfer, or assignment in 
violation hereof shall be null and void; 

(h) That any and all vessels owned or chartered by the United States Government 
shall in case of any emergency or in time of war have prior right, free of charge, to 
the use of any such structure; and 

(i) Shall contain such further restrictions as the Secretary of War may see fit to 
impose therein. 

Sec. 4. That no such authorization by the Secretary of War shall be granted to 
any person unless the applicant therefor shall first furnish to the Secretary' of War 
satisfactory proof either that he (or it) is the owner or lessee of the approaches to 
the shore end of the proposed structure, with the right to use the same in connection 
therewith, or that he (or it) is the owner of a franchise granting the right to use 
said approaches in connection with such proposed structure. Everv application to 
the Secretary of War for any such authorization shall be’ accompanied by plans and 
specifications for such structure, extension, or improvement, which said plans and 
specifications shall be submitted to and approved by the Chief of Engineers of the 
United States Army before the granting of any such authorization by the Secretary 
of War. 

Sec. 5. That nothing herein contained shall be so construed as to affect lesal or 
equitable rights, if any, existing at the date of the approval of this act which were 
acquired by the government of Porto Rico or anv other party under any contract, 
lease, or license for the construction, extension, improvement, or maintenance of anv 
such structure granted by the United States authorities prior to the approval of this 
act. 

The object of this bill is to empower the Secretary of War. under 
certain restrictions, to authorize the construction, extension, and main- 


WHARVES, PIERS, ETC., LN PORTO RICO. 


261 


tenance of wharves, piers, and other necessary structures on lands 
belonging to the United States or underlying harbor areas and navi¬ 
gable streams in the island of Porto Rico and the islands adjacent 
thereto. 

At present Porto Rico is in great need of additional piers and 
wharves for the accommodation of steamships and sailing vessels visit¬ 
ing the island. The bill provides for the building of such structures 
under restrictions which will prevent their monopolization, and at the 
same time secure greatly needed accommodation in transportation 
facilities. 

The bill as amended is unanimously recommended for passage by 
the Committee on Insular Affairs. 


69th Congress, | HOUSE OF REPRESENTATIVES. ( Report 
1st Session . \ I No. 4661. 


CONSTRUCTION AND MAINTENANCE OF WHARVES, PIERS, 
ETC., IN PORTO RICO. 


June 2, 1906.—Ordered to be printed 


Mr. Cooper, of Wisconsin, from the committee of conference, sub¬ 
mitted the following 

CONFERENCE REPORT. 

[To accompany H. R. 18502.] 

The committee of conference on the disagreeing votes of the two 
Houses on the amendments of the Senate to the bill (H. R. 18502) to 
empower the Secretary of War, under certain restrictions, to authorize 
the construction, extension, and maintenance of wharves, piers, and 
other structures on lands underlying harbor areas and navigable streams 
and bodies of water in or surrounding Porto Rico and the islands adja¬ 
cent thereto, having met, after full and free conference have agreed 
to recommend and do recommend to their respective Houses as follows: 

That the Senate recede from its amendment on page 3, line 24, after 
“Secretary of War,” as follows: Provided, however , That vessels hav¬ 
ing contracts with the Government of the United States for carrying 
the mails may , with the consent of the owner of said structure arid 
unden' the control and direction of the Secretary of War , be given a 
'preference to expedite the landing and discharge of their cargoes at said 
structure. 

That the House recede from its disagreement to all other amend-* 
ments of the Senate and agree to the same. 

Henry Allen Cooper, 

Edgar D. Crumpacker, 

Wm. T. Zenor, 

Managers on the part of the House of Representatives, 

J. B. Foraker, 

Geo. Peabody Wetmore, 

S. R. Mallory, 

Managers on the part of the Senate- 


262 





. WHARVES, PIERS, ETC., IN PORTO RICO. 263 

STATEMENT OF MANAGERS ON THE PART OF THE HOUSE. 

The managers of the House on the disagreeing vote of the two 
Houses on the amendments of the Senate to the House bill (H. R. 
18502) entitled “An act to empower the Secretary of War, under cer¬ 
tain restrictions, to authorize the construction, extension, and main¬ 
tenance of wharves, piers, and other structures on lands underlying 
harbor areas and navigable streams and bodies of water in or sur¬ 
rounding Porto Rico and the islands adjacent thereto,” state that the 
House receded from its disagreement to Senate amendment No. 1, 
inserting on page 2, line 13, after the word “or,” at the end of the 
line, the words “with the approval of the Secretary of War.” 

The bill as it passed the House provided that either the Government 
of the United States or the government of Porto Rico should have the 
right after the expiration of thirty years to take any structure built 
under the provisions of the act after paying the value of the same, etc. 
The amendment simply inserts the words “ with the approval of the 
Secretary of War,” so that as amended the act provides u that the 
Government of the United States, or, with the approval of the Secre¬ 
tary of War, the government of Porto Rico, shall have the right at 
any time after the expiration of thirty years from the date of such 
authorization, and after three months’ notice, to take any such stucture 
from the owner thereof upon paying the value of the same at the time 
it shall be so taken,” etc. 

The House receded from its disagreement to Senate amendment No. 

2, inserting on page 2, line 22, after the words “Porto Rico,” the 
words “ exercising the right of purchase as aforesaid.” This is a ver¬ 
bal amendment which simply makes clearer the intent of the original 
bill. 

The House receded from its disagreement to Senate amendment No. 

3, inserting on page 3, line 1, before the word “Government,” the 
words “Secretary of War for the.” The original bill provided for 
the appointment of a board of four members, two of whom should be 
appointed by the Government of the United States, etc. This amend¬ 
ment simply provides that the Secretary of War shall act for the 
Government of the United States in making such appointments. 

The House receded from its disagreement to Senate amendment No. 

4, inserting on page 3, line 2, after the word “or,” the words “ by the 
governor of Porto Rico for.” The original bill provides for the 
appointment of a board, two of whom might be appointed by the gov¬ 
ernment of Porto Rico. This amendment simply provides that these 
appointments shall be made by the governor of Porto Rico for the 
government of Porto Rico. 

The House receded from its disagreement to Senate amendment No. 

5, inserting on page 3, line 2, aftor the words “Porto Rico,” the words 
“as the case may be.” This is a mere verbal amendment, making 
clearer the intent of the original bill. 

The Senate receded from its amendment No. 6, inserting on page 4, 
line 2, after the words “Secretary of War,” at the end of paragraph 
(c), the following proviso: “ Provided , however , That vessels having 
contracts with the Government of the United States for carrying the 
mail may, with the consent of the owner of said structure and under 
the control and direction of the Secretary of War, be given a prefer- 


264 WHARVES, PIERS, ETC., IN PORTO RICO. 

ence to expedite the landing and discharge of their cargoes at said 
structure.” 

The amendments agreed upon do not at all change the effect of the 
bill as it passed the House, but only make clearer its meaning. 

Henry Allen Cooper, 

Edgar D. Crumpacker, 

Wm. T. Zenor, 

Managers on die part of the House . 


[Public—N o. 221.] 


An Act To empower the Secretary of War, under certain restric¬ 
tions, to authorize the construction, extension, and maintenance of wharves, piers, 
and other structures on lands underlying harbor areas and navigable streams and 
bodies of waters in or surrounding Porto Rico and the islands adjacent thereto. 

Be it enacted by the Senate and House of Representatives of the United. 
States of America in Congress assembled , That the Secretar} 7 of War 
be, and he is hereby, empowered, subject to the restrictions and under 
the conditions hereinafter mentioned, to authorize the construction, 
extension, and maintenance of any wharf, pier, dolphin, boom, weir, 
breakwater, sea wall, bulkhead, jetty, or other structure on any of the 
lands belonging to the United States which underlie the harbor areas 
and navigable streams and bodies of waters in or surrounding Porto 
Rico and the islands adjacent thereto and the filling in and dredging of 
such lands. 

Sec. 2. That the word “person” as used in this Act shall be con¬ 
strued to import either the singular or the plural, as the case demands, 
and shall include individuals, municipalities, quasi-municipal corpora¬ 
tions, corporations, companies, and associations. 

Sec. 3. That the powers granted in the foregoing sections shall be 
subject, however, to the following restrictions: 

(a) No authorization to any person to construct, extend, or maintain 
any such structure shall continue for a longer period than the period 
set forth in such authorization, and shall provide that the Govern¬ 
ment of the United States or with the approval of the Secretary of 
War the government of Porto Rico shall have the right at any time 
after the expiration of thirty years from the date of such authoriza¬ 
tion, and after three months’ notice, to take an} 7 such structure from 
the owner thereof upon paying the value of the same at the time it 
shall be so taken, and the amount paid shall not exceed the original cost 
of the same as may be fixed under paragraph (f) hereof. In case the 
Government of the United States or the government of Porto Rico, 
exercising the right of purchase as aforesaid should claim that the 
value of the structure when seized and taken is less than its original 
cost, the extent of deterioration or diminution from the original value 
shall be determined by a board or commission of four members, two 
of whom shall be appointed by the Secretary of War for the Govern¬ 
ment of the United States or by the Governor of Porto Rico for the 
government of Porto Rico as the case may be and two by the owner 
of such structure. If the four members thus chosen and appointed 
shall not be able to agree, they shall choose by mutual agreement a 
referee, whose decision shall be final, but in no case shall the amount 
to be paid exceed the original cost as fixed under the provisions of 
said paragraph (f). If the four members thus chosen and appointed 
are unable by mutual agreement to select a referee, then the Chief of 
Engineers of the United States Army shall be the referee, and his 
decision shall be final. 


265 


266 


All authorizations granted by the Secretary of War for any such 
construction, extension, or maintenance 

(b) Shall be subject to alteration, amendment, or repeal by Congress; 

(c) Shall provide that the wharfage fees and charges for vessels, for 
passengers, and for goods loaded or discharged on, from, at, or over 
any such structure, and for approach and entry to any such structure, 
shall be no greater than are just, reasonable, and fairly remunerative, 
and for that purpose shall at all times be subject to regulation and 
revision bj- the said Secretary of War; that such fees and charges 
shall be the same for all persons, and all persons shall have equal right 
to approach, enter, and use the said structure, subject to such reason¬ 
able rules and regulations as the grantee thereof may establish, all of 
which rules and regulations shall be subject to revision by the Secre¬ 
tary of War; 

(d) That all necessary dredging in or in connection with the said 
structure, or the use thereof, shall be made by the grantee of the 
authorization; 

(e) That such authorization shall be null and void unless actual 
construction shall be commenced within one year from the date of such, 
authorization by the Secretary of War, and completed within three 
3 ^ears from the date of such authorization, or within such lesser periods 
as may be therein fixed: Provided, That the Secretary of War may 
for due cause shown extend the time for the completion of such con¬ 
struction for a reasonable period. 

(f) That duty verified accounts of expenditure for the construc¬ 
tion, extension, or improvement of such structure shall be exhibited 
to, and filed with, the United States army engineer at the cit} T of San 
Juan, Porto Rico, who shall report to the Secretar}^ of War the entire 
cost of such structure, extension, or improvement to be built under 
such authorization. 

(g) That the said structure shall not be sublet, sold, transferred, or 
assigned, nor shall the authorization therefor be granted, sold, trans¬ 
ferred, or assigned without the consent of the Secretary of War, nor in 
any case to a person engaged, directly or indirectly, in the same line 
of business, in the same harbor area, navigable stream, or body of 
water, and that any grant, subletting, sale, transfer, or assignment in 
violation hereof shall be null and void; 

(h) That any and all vessels owned or chartered by the United States 
Government shall in case of anj^ emergency, or in time of war, have 
prior right, free of charge, to the use of any such structure; and 

(i) Shall contain such further restrictions as the Secretaiy of War 
may see fit to impose therein. 

Sec. 4. That no such authorization b}' the Secretar}' of War shall be 
granted to any person unless the applicant therefor shall first furnish 
to the Secretary of War satisfactory proof either that he (or it) is the 
owner or lessee of the approaches to the shore end of the proposed 
structure, with the right to use the same in connection therewith, or 
that he (or it) is the owner of a franchise granting the right to use said 
approaches in connection with such proposed structure. Every appli¬ 
cation to the Secretary of War for any such authorization shall be 
accompanied by plans and specifications for such structure, extension, 
or improvement, which said plans and specifications shall be submitted 
to, and approved by, the Chief of Engineers of the United States Army 




267 


before the granting of any such authorization by the Secretary of War, 
and such plans and specifications shall not be deviated from in any 
such structure, extension, or improvement without the written consent, 
first obtained, of the said Chief of Engineers. 

Sec. 5. That nothing herein contained shall be so construed as to 
affect legal or equitable rights, if any, existing at the date of the 
approval of this Act which were acquired by the government of Porto 
Rico or any other party under any contract, lease or license, for the 
construction, extension, improvement, or maintenance of any such 
structure, granted by the United States authorities prior to the approval 
of this Act. 

Approved, June 11, 1906. 


59th Congress, ) HOUSE OF REPRESENTATIVES, j Report 

1st Session, j | No. 4215. 


AMERICAN CITIZENSHIP FOR INHABITANTS OF PORTO 

RICO. 


May 16, 1906.—Committed to the Committee of the Whole House on the state of the 
Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 

submitted the following 

REPOET. 

[To accompany H. R. 17661.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 17661) providing that the inhabitants of Porto Rico shall be 
citizens of the United States, beg leave to report that the} 7 have had 
the same under consideration and recommend that said bill do pass with 
the following amendment, to wit: 

On page 2, in line 3 of the bill, after the word “they,” insert the 
following: “together with such other citizens of the United States as 
may reside in Porto Rico,” so that said bill when amended shall read 
as follows, to wit: 

A BILL providing that the inhabitants of Porto Rico shall be citizens of the United States. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled , That section seven of an act temporarily to provide revenues 
and a civil government for Porto Rico, and for other purposes, approved April 
twelfth, nineteen hundred, be, and it is hereby, amended to read as follows: 

“Sec. 7. That all inhabitants continuing to reside therein who were Spanish sub¬ 
jects on the eleventh day of April, eighteen hundred and ninety-nine, and then 
resided in Porto Rico, and their children born subsequent thereto, shall be deemed 
and held to be citizens of the United States, except such as shall have elected to 
preserve their allegiance to the Crown of Spain on or before the eleventh day of 
April, nineteen hundred, in accordance with the provisions of the treaty of peace 
between the United States and Spain entered into on the eleventh day of April, 
eighteen hundred and ninety-nine; and they, together with such other citizens of 
the United States as may reside in Porto Rico, shall constitute a body politic under 
the name of The People of Porto Rico, with governmental powers as hereinafter con¬ 
ferred, and with power to sue and be sued as such.” 

Porto Rico has nearly 1,000,000 of inhabitants. These people are 
law-abiding and industrious (many of them of high intelligence and 
culture), and in the opinion of your committee as much entitled to be 

268 







AMERICAN CITIZENSHIP FOR INHABITANTS OF PORTO RICO. 269 

recognized as citizens of the United States as are the less than 200,000 
inhabitants of Hawaii who enjoy this privilege. 

Porto Rico is now, and always will be, of much value to the United 
States, because of the island’s large business interests and possibilities, 
and its important and rapidly increasing trade with this country. 

Already Congress has treated the island as if it were a part of the 
United States. All tariff barriers have been thrown down. Trade is 
free between the island and the mainland. All of the statutory laws 
of the United States which are applicable, excepting only those relat¬ 
ing to internal revenue, have been extended over the island. More¬ 
over, a resident of Porto Rico, now its commissioner to the United 
States, has just been appointed by the President of the United States 
one of the members of the American delegation to the coming Pan- 
American Congress to be held at Rio de Janeiro, Brazil. 

In his last annual message to Congress the President recommended 
that the people of Porto Rico be accorded American citizenship. 

The foregoing facts, in the opinion of j^our committee, clearly indi¬ 
cate that our people have already decided that Porto Rico is forever to 
remain a part of the United States. 

Aside from these considerations, your committee believe that with 
the completion of the Panama Canal, Porto Rico will become of such 
strategic importance as to preclude all doubt concerning its permanent 
retention by this Government. 

Your committee believe that a people so worthy as are the inhabitants 
of Porto Rico, living, as they do, in territory destined forever to be 
under the dominion of the Government of the United States, are enti¬ 
tled, and ought to be accorded the privilege and honor of American 
citizenship. 

Your committee therefore recommend that the bill as amended do 
pass. 


59th Congress, ) HOUSE OF REPRESENTATIVES, j Report 
1st Session . ) 1 No. 4216. 


EXEMPTION FROM TAXATION OF PORTO RICAN BONDS 
FOR CONSTRUCTION OF PUBLIC HIGHWAYS, ETC. 


May 16,1906.—Committed to the Committee of the Whole House on the state of the 
Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 
submitted the following 

REPORT. 

[To accompany H. R. 18206.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 18206) to provide for the exemption from taxation of all bonds 
issued by the government of Porto Rico for the construction of public 
highways, bridges, and other public improvements, beg leave to report 
that they have had the same under consideration and recommend that 
said bill do pass with the following amendment, to wit: 

On page 1, in line 3, of the bill, after the word “bonds,” insert the 
words “which may hereafter be;” so that the bill when amended shall 
read as follows, to wit: 

A BILL to provide for the exemption from taxation of all bonds issued by the government of Porto 
Rico for the construction of public highways, bridges, and other public improvements. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled , That all bonds which may hereafter be issued by the govern¬ 
ment of Porto Rico, or by its authority, for the construction of public highways, 
bridges, and other public improvements, shall be exempt from taxation by the 
Government of the United States, or by the government of Porto Rico, or by the 
government of the Philippine Islands, or by any political or municipal subdivisions 
thereof, or by any State, or by any county, municipality, or other municipal sub¬ 
division of any State, possession, or Territory of the United States, or by the District 
of Columbia. 

The purpose of this bill is by exempting from taxation all bonds 
issued by or under the authority of the government of Porto Rico to 
secure for the benefit of such government a much lower rate of interest 
than would be the case if its bonds were taxable. Freedom from taxa¬ 
tion would, of course, lower the rate of interest on such bonds. 

The Government of the United States is entirely justified in author¬ 
izing this exemption, because the work being done in Porto Rico is 
under the authority of Congress, and is therefore the work of the United 
270 







EXEMPTION FROM TAXATION OF CERTAIN PORTO RICAN BONDS. 271 


States. The Porto Rican government is really only an agency of the 
United States, and any bonds it may issue or authorize to be issued for 
public works would in fact be for accomplishing the purposes of the 
United States. 

Exemption of these bonds from taxation would insure their being 
purchased by administrators, trust companies, and other persons of 
large capital whose securities are for the purposes of taxation always 
open to inspection. Such exemption would naturally increase the 
demand for the bonds and, of course, reduce the rate of interest to be 
paid by the taxpayers of Porto Rico. 

Your committee therefore recommend that the bill as amended do 

pass. 




/ 


59th Congress, ) HOUSE OF REPRESENTATIVES, f Report 

1st Session. J 1 No. 4218. 


QUALIFICATIONS OF JURORS IN PORTO RICO. 


May 16, 1906.—Referred to the House Calendar and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 
submitted the following 

REPORT. 


[To accompany S. 5512.] 


The Committee on Insular Affairs, to whom was referred the bill 
(S. 5512) defining the qualifications of jurors for service in the United 
States district court in Porto Rico, beg leave to report that they have 
had the same under consideration and recommend that said act do pass 
without amendment. 

The purpose of this act is so clearly set forth in the accompanying 
report of the Senate Committee on Pacific Islands and Porto Rico that 
no further explanatory statement is deemed essential at the present 
time. 

Tour committee therefore desire merely to submit herewith a copy 
of the Senate report, and to emphasize the necessity for the enactment 
into law of the proposed legislation. 


[Senate Report No. 3474, Fifty-ninth Congress, first session.] 

The Committee on Pacific Islands and Porto Rico, having had under consideration 
the following bill, report the same favorably and recommend its passage: 

“A BILL defining the qualifications of jurors in Porto Rico.” 

“Beit enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled , That the qualifications of jurors as fixed by the local laws of 
Porto Rico shall not apply to jurors selected to serve in the district court of the United 
States for Porto Rico, but that the qualifications required of jurors in said court shall 
be that each shall be of the age of twenty-one years and not over sixty-five years, a 
resident of Porto Rico for not less than one year, and having a sufficient knowledge 
of the English language to enable him to duly serve as a juror: Provided , That the 
exemptions from jury duty allowed by the local law shall be respected by the court 
when insisted upon by veniremen: And provided further, That the juries for said 
court shall always be selected and drawn in accordance with the laws of Congress 
regulating the same in the United Stages courts.” 

272 






QUALIFICATIONS OF JURORS IN PORTO RICO. 


273 


Under the organic law for the government of Porto Rico, approved April 12,1900, 
it is provided that the district court of the United States for Porto Rico shall have, 
in addition to the jurisdiction conferred upon the district courts of the United States, 
also the jurisdiction conferred upon circuit courts of the United States, and that the 
court “shall proceed therein in the same manner as a circuit court.” 

The result of this provision is that in the choice of jurors for the trial of causes in 
the district court of the United States tor Porto Rico the court is required to select 
persons having the qualifications prescribed for jurors in the insular courts of Porto 
Rico. It has been found by experience that the qualifications required for jurors in 
the courts of Porto Rico are not satisfactory for jurors in district court of the United 
States, where all proceedings are conducted in the English language. 

The purpose of the bill is to remedy this difficulty. 

The following extract from a letter received by the chairman of the Committee on 
Pacific Islands and Porto Rico from Hon. Charles F. McKenna, judge of the United 
States court for Porto Rico, dated San Juan, March 27, 1906, explains the necessity 
for enacting the proposed legislation: 

“The gravest difficulty will be experienced in securing jurors in Porto Rico for 
service in the United States court who possess all the qualifications required by the 
laws of Porto Rico for jurors in insular courts. Any attempts to use judicial discre¬ 
tion to modify or dispense with any of said qualifications by the United States court 
in civil cases is disputed and assigned as a cause for appeal to the Supreme Court. I 
will have submitted for your information the opinion of Hon. N. B. K. Pettingill, 
for the past six years United States district attorney for Porto Rico, recently filed 
with the Attorney-General of the United States, complaining that unless relief be had 
on this matter, jury trials in the Federal court in Porto Rico may have to be entirely 
suspended.” 

Mr. Pettingill’s opinion is contained in the following letfer: 


Washington, D. C., May $ } 1906. 

Sir: The judge of the United States court for the district of Porto Rico having/ 
resigned, I take the liberty of addressing the Department upon the subject of Senate? 
bill 5512, which bill was referred to the judge before his resignation, and stating that 
to my knowledge his opinion was favorable to the passage of the bill as introduced. 

It may be expedient to repeat what I have stated in my former letters, that under 
the present law it has been definitely ascertained that the requisite number of jurors 
speaking the English language, which the organic act requires, and possessing all the 
qualifications of the local law. can not be found on the island, so that a legal jury box 
containing the names of 300 fully qualified jurors can not be made up, and whenever 
any challenge to the legality of the jury is made by a litigant the work of the court 
in law cases must necessarily come to a*standstill until the law is amended. 

Respectfully, 

N. B. K. Pettingill, 

United States Attorney for Porto Rico. 

The Attorney-General, 

Washington , D. C. 


The enactment of the proposed measure is also approved by the Department of 
Justice, as is shown by the following communication from the Acting Attorney- 
General, Mr. Hoyt: 

Department of Justice, 

Washington, May 4 , 1906. 

Sir: In the matter of Senate bill 5512, amending the jury law of Porto Rico, which 
you referred to this Department some days since for an expression of my views, I 
have to state that I recommend the passage of the bill as introduced. 

Immediately upon the receipt of your letter I communicated with the United 
States district judge for the island of Porto Rico, asking him for his views and those 
of the United States attorney, but as yet no reply has come to hand. # 

Within the last few days Mr. Pettingill, the United States attorney, arrived in the 
city, and I took the opportunity to discuss the matter with him. I inclose herewith 
a copy of the letter he has written me upon the subject. 

Respectfully, . H. M. Hoyt, 

Acting Attorney-General. 

Hon. Joseph B. FoRAkER, 

United States, Senate, 


35815—08- 


-18 


[Public —No. 294.] 

An Act Defining the qualifications of jurors for service in the United 
States district court in Porto Rico. 

Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled , That the qualifications of 
jurors as fixed by the local laws of Porto Rico shall not apply to jurors 
selected to serve in the district court of the United States for Porto 
Rico, but that the qualifications required of jurors in said court shall 
be that each shall be of the age of twenty-one years and not over sixty- 
five years, a resident of Porto Rico for not less than one year, and hav¬ 
ing* a sufficient knowledge of the English language to enable him to 
duly serve as a juror: Provided , That the exemption from jury duty 
allowed b}^ the local law shall be respected by the court when insisted 
upon by veniremen: And provided further. That the juries for said 
court shall always be selected and drawn in accordance with the laws 
of Congress regulating the same in the United States courts. 

Approved, June 25, 1906. 

274 


59th Congress, ) HOUSE OF REPRESENTATIVES, j Report 

1st Session. | ’ ] jjo. 4565 . 


LOAN OF UNITED STATES VESSEL TO THE PHILIPPINE 
GOVERNMENT. 


May 31,1906.—Committed to the Committee of the Whole House on the state of the 
Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, sub¬ 
mitted the following 

REPORT. 

[To accompany H. R. 19755.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 19755) to authorize the Secretary of the Navy to loan temporarily 
to the Philippine government a vessel of the United States Navy for 
use in connection with nautical schools of the Philippine Islands, beg 
leave to report that they have had the same under consideration and 
recommend that said bill do pass without amendment. 

The object of this bill is to authorize the loan to the government of 
the Philippine Islands of a naval vessel suitable for a school-ship at the 
nautical school now established in the islands. There is urgent need 
of such a ship for the purpose of instructing the young men who are 
being trained in this school to be sailors. 

The loan of such a ship was first recommended by the governor- 
general of the Philippine Islands in 1904. It was then believed that 
the law relating to school-ships could be construed as applying to the 
Philippine Islands; but this belief, it seems, was erroneous, and there 
was no law on the statute books which would permit the loan to be made. 
The bill in general principles follows the present law with reference to 
the loaning of vessels for the use of the naval militia of the States, 
and has been submitted to and approved by the Secretary of the Navy. 

Your committee therefore recommend that the bill do pass. 

275 







[Public —No. 406.] 

An Act To authorize the Secretary of the Navy to loan tempora¬ 
rily to the Philippine government a vessel of the United States Navy for use in con¬ 
nection with nautical schools of the Philippine Islands. 

Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled , That the Secretary of the 
Navy be, and he is hereby, authorized and empowered to loan tempo¬ 
rarily to the government of the Philippine Islands, upon the written 
application of the Secretary of War, a vessel of the United States 
Navy, to be selected from such vessels as are not suitable or required 
for general service, together with such of her apparel, charts, books, 
and instruments of navigation as he may deem proper, said vessel to 
be used only by such nautical schools as are or may hereafter be main¬ 
tained by said government of the Philippine Islands: Provided , That 
when such schools shall be abandoned, or when the interests of the 
naval service shall so require, such vessel, together with her apparel, 
charts, books, and instruments of navigation, shall be immediately 
restored to the custody of the Secretary of the Navy: And provided fur¬ 
ther, That when such loan is made to the government of the Philippine 
Islands, the Secretary of the Navy is authorized to detail from the 
enlisted force of the Navy a sufficient number of men, not exceeding 
six for an} 7 vessel, as ship keepers, the men so detailed to be additional 
to the number of enlisted men allowed by law for the naval establish¬ 
ment, and in making details for this service preference shall be given 
to those men who have served twenty years or more in the Navy. 

Approved, June 30, 1906. 


276 


59th Congress, ) HOUSE OF REPRESENTATIVES. ( Report 
1st Session, j | No. 4566. 


DISTRIBUTION OF PUBLIC DOCUMENTS TO THE LIBRARY 
OF THE PHILIPPINE GOVERNMENT AT MANILA. 


May 31,1906.— Committed to the Committee of the Whole House on the state of the 
Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 
submitted the following 

REPORT. 

[To accompany H. R. 19754.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 19754) to provide for the distribution of public documents to 
the library of the Philippine government at Manila, P. I., beg leave 
to report that they have had the same under consideration and recom¬ 
mend that said bill do pass without amendment.. 

The Philippine government is desirous that its library at Manila 
receive public documents issued by the United States Government, 
and this bill provides that such documents shall be so distributed. 

Your committee therefore recommend that the bill do pass. 


277 





[Public— No. 18.] 

An Act To provide for the distribution of public documents to the 
library of the Philippine government at Manila, Philippine Islands. 

Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled , That the superintendent of 
documents is hereby authorized and directed to supply one copy of 
each document delivered to him for distribution to State and Terri¬ 
torial libraries and designated depositories to the library of the 
Philippine government, in the city of Manila, Philippine Islands; and 
the Public Printer is hereby directed to print, bind, and deliver to the 
superintendent of documents the extra number of documents required 
to comply with this Act. 

Approved, January 18, 1907. 

278 



59th Congress, ) HOUSE OF REPRESENTATIVES, j Report 

1 st Session. ( -j No. 4379. 


TEMPORARY SUBSTITUTE FOR UNITED STATES DISTRICT 
JUDGE IN TERRITORY OF PORTO RICO. 


June 6, 1906. —Referred to the House Calendar and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 
submitted the following 

REPORT. 

[To accompany H. R. 14172.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 14172) to provide a temporary substitute for the United States 
district judge in the Territory of Porto Rico, beg leave to report that 
they have had the same under consideration and recommend that said 
bill do pass without amendment. 

The object of the bill is to provide a substitute judge for the district 
court of Porto Rico to serve at such times as the regular judge may 
be unable to serve, either because of illness or temporary absence, or 
because of being related to either plaintiff or defendant in a suit pend¬ 
ing before his court, or because of having some pecuniary interest in 
the matter in dispute. Such contingencies are provided for in the 
bill by the designation and appointment by said judge of one of the 
justices of the supreme court of Porto Rico who is not so disqualified 
or unable to serve, temporarily to hold court and discharge all the 
judicial duties of said district judge. 

At present there is only one district judge in the island of Porto 
Rico, and whenever he is unable to hold court by reason of any of the 
causes mentioned above the business of the court is greatly retarded. 
Your committee believe that this difficulty should be remedied, and 
therefore recommend that said bill do pass. 


279 







59th Congress, I HOUSE OF REPRESENTATIVES. ( Report 
1st Session. ) 1 No. 4923. 


STANDARD OF VALUE AND COINAGE SYSTEM IN PHILIP¬ 
PINE ISLANDS. 


June 12, 1906.—Committed to the Committee of the Whole House on the state of the 
Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee. on Insular Affairs, 
submitted the following 

REPORT. 

[To accompany S. 6243.] 

The Committee on Insular Affairs, to whom was referred the bill 
(S. 6243) to amend an act approved March 2, 1903, entitled “An act to 
establish a standard of value and to provide for a coinage system in 
the Philippine Islands,” beg leave to report that they have had the 
same under consideration, and recommend that said bill do pass without 
amendment. 

The necessity for the passage of the bill is due to the recent marked 
and unexpected rise in the value of silver, thus making the bullion 
value of the Filipino peso greater than its face value. 

The following quotation from a cablegram sent by the acting 
governor-general of the Philippine Islands clearly sets forth the 
situation: 

Manila, P. I., May 17, 1906. 

The Secretary op War, Washington , D. C.: 

May 10, only Philippine currency available for disbursement, aside from sub¬ 
sidiary minor and mutilated, 2,224,000 pesos. 

Treasurer recommends immediate purchase of silver sufficient for 4,000,000 pesos, 
which, at present prices for forward silver, would involve loss of about 300,000 out 
of gold-standard fund. I am not prepared to recommend such purchase now. Con¬ 
gressional action heretofore recommended would relieve situation for a long time to 
come. 

Treasurer recommends authority be secured to reduce fineness of peso to 0.800, 
same as Japanese yen and new Mexican subsidiary coins, which would not affect size 
of peso, would increase durability, and render improbable danger of export, which 
now exists. 

Present peso materially finer than Commission originally recommended. The 
action recommended by treasurer in this respect wise, conservative, and much safer 
than present conditions. New coins would circulate side by side with present ones, 
just as Mexican and Spanish Filipino circulated side by side, and profit would pay 
for rec.oinage of existing coin. 

* 

280. 


Ide. 














COINAGE SYSTEM, ETC., IN THE PHILIPPINE ISLANDS. 281 


The pertinent facts, together with the urgent need of the proposed 
legislation, are concisely set forth in a communic ation from Mr. Charles 
A. Conant and Prof. Jeremiah W. Jenks, members of the late Inter¬ 
national Coinage Commission, both of whom have made a thorough 
personal inspection and study of conditions in the Philippines, and are 
recognized in the business world as authorities upon the subject of 
finance. These gentlemen write as follows: 

It is in our opinion very important that some action should be taken on the sub¬ 
ject at the present session of Congress. If a change in the ratio is not authorized 
there is danger that the existing coinage will be expelled from the islands by the 
rise in the price of silver bullion. 

The silver market has been exceedingly strong for the past six months. The price 
of silver bullion on May 10 last was as high as 31 pence per ounce, London standard, 
and the price in New York was 67 cents, American standard. This is about 2£ cents 
per ounce above parity at the ratio of 32 to 1 which prevails in the coinage system of 
the Philippine Islands, and would afford sufficient inducement to export the silver 
coins as bullion if this movement were not checked by the law already enacted by 
the Philippine government prohibiting exportation, "and by other causes reduc¬ 
ing the net profit upon shipments for so great a distance. It is the opinion of experts 
in the silver market that silver is likely to go higher in the future. This will make 
it more and more difficult to enforce penalties against the exportation of the metal 
from the Philippines when such a movement affords the promise of large profits. 

A remarkable change has taken place in the course of silver within the past three 
years. When the Commission on International Exchange was appointed by the 
President of the United States, in compliance with the requests of Mexico and China, 
to seek the restoration of stable exchange between the gold-standard countries and 
the silver-using countries, silver was substantially at its lowest ebb. It was the gen¬ 
eral opinion, even of expert observers of the market and of political economists, that 
its decline could not be checked. This decline had carried silver from an average 
quotation of 61£ pence per ounce in 1866 to 53& pence in 1876, 45| pence in 1886, and 
30ff pence in 1896. The further fall in six years to an average of 24,V pence in 1902, 
and to a minimum quotation in November of 21f£ pence, constantly encouraged 
“short sales” of silver by speculators in London, which up to that time they had 
been able almost invariably to “cover” at a profit. 

It was under the influence of these conditions that the weight and fineness of the 
Philippine coin were fixed. The original recommendation of the Philippine Com¬ 
mission, embodied in a report presented by one of the signers of this letter to the 
Secretary of War, provided for a coin of 385.8 grains, 0.835 fine. In view of the fail¬ 
ure of Congress to act upon this report at the long session of 1902, and the sharp 
decline in silver after that date, it was deemed prudent, when a law' was enacted in 
1903, to raise the weight of the coin to 416 grains, 0.900 fine, corresponding substan¬ 
tially with the weight and fineness of the Mexican silver dollar, to the use of which 
the people of the Philippines were already accustomed. 

The course of silver has been now for about three years tending upward. The 
lowest point was touched in November, 1902, and again "in January, 1903, when the 
London price of silver was 21 jf pence, and the value of the bullion contained in an 
American silver dollar was about37 cents. Beginning with February, 1903, improve¬ 
ment began in the price of silver, which has been arrested only temporarily at any 
time since that date, until now there has been a recovery from the low point of 1903 
of more than 45 per cent. 

The course of events since 1902, therefore, has negatived the belief, then generally 
held, that silver would continue to decline in gold value. The supply had been for 
many years nearly constant and had exceeded demand at the old prices. The Ger¬ 
man Imperial Government sold at one time large amounts of silver and still retained 
enough to execute all its subsidiary coinage down to a recent date. The Government 
of the United States also not only suspended in 1893 regular purchases of silver, but 
availed itself of an accumulated stock of the metal for its subsidiary coinage, while 
the governments, of the Latin Union, in providing for new subsidiary coinage coined 
up their existing 5-franc pieces. Thus these governments withdrew from the silver 
market and the chief outlets remaining for the metal were found in India and the 

Orient. , . ,, 

With the exhaustion or reduction of these old stocks occurred a considerable change 
in the demand for silver. All the governments which had been using their old silver 
have appeared in the market, or will soon appear, as purchasers of bullion. The 
war between Russia and Japan called for large amounts of silver in Manchuria, and 


282 COINAGE SYSTEM, ETC., IN THE PHILIPPINE ISLANDS. 


while this demand was in a sense temporary, the silver absorbed there seems to be 
finding its way into circulation in different parts of China and the East, instead of 
returning upon the bullion market. The government of British India, moreover, 
has continuously made large purchases of silver since the autumn of 1903, and indi¬ 
cated to the Commission on International Exchange in 1904 that these purchases 
were being made with comparative regularity. Still more recently a fund, known as 
the “special ingot reserve,” has been accumulated in London by the Indian govern¬ 
ment* with the avowed purpose of being prepared to meet coinage demands in India 
promptly when they arose. The last Indian financial statement states that expe¬ 
rience has shown that the amount of this reserve “ originally fixed was not large 
enough, and it has been decided that its amount shall be doubled.” The adop¬ 
tion of this policy in India has been a natural result of the great expansion of the 
crop-shipping area by the extension of the railway network, and there are at present 
no indications of a cessation of the demand for the white metal in India. 

Turning to the side of the supply of silver, there is no reason to believe, in the 
opinion of experts, that the rise of the price to 31 pence, or even several pence higher, 
will have any notable effect in stimulating production. Nearly all the silver now 
produced in commercial quantities is a by-product of lead, copper, and zinc. The 
supply is influenced by the price of these metals more than by the price of silver 
bullion. There is no indication that new mines will contribute to any considerable 
extent to increasing the supply, unless the price advances very much beyond recent 
quotations, to a point which would make it practically impossible to maintain the 
parity between gold and silver in the Philippines and keep existing silver coins in 
the islands. 

A fact which makes the present upward tendency of silver a serious menace to 
existing coinage systems based upon too low a value for the metal is that the recent 
?ise has taken place in face of the adoption by the Republic of Mexico of the gold 
exchange standard. When silver rose last autumn above 30 pence per ounce, Lon¬ 
don standard, the opportunity was quickly availed of by the Commission on Exchange 
and the banks of Mexico to substitute gold for silver in their reserves at a profit. The 
result was to release about 45,000,000 pesos ($22,500,000) in silver for the London 
market outside of the normal supply. This reserve stock, so to speak, operated as 
a safety valve to keep the price of silver bullion from advancing far beyond the Mexi¬ 
can parity of about 32 to 1. With this stock exhausted, there is possibility of a press¬ 
ing demand for silver from India and other countries which might, within the space 
of a few weeks, carry the bullion price much above 31 pence and make the profit 
from melting up and exporting the Philippine coins so considerable as to overcome 
the restraints of legal prohibition. For this reason action by Congress without delay 
seems to us highly desirable. 

As the future course of silver can not be calculated with certainty, even by the most 
expert, we would not recommend that a new ratio be fixed by Congress, but that the 
government of the Philippine Islands be given authority to change the ratio to cor¬ 
respond with the development of events. The proposal made does not involve any 
change of the standard of value in the islands, which is based upon gold, but simply 
the granting of authority to the Philippine government to adapt the size and fineness 
of the token coins to the gold value given them by law, so that they shall not become 
more valuable as bullion than their face value in gold. While a reduction of weight 
and fineness to the limits originally proposed by the Philippine government in 1901 
would keep the coins within their face value at the present price of silver, a further 
considerable rise in the price would pass this limit and compel another recoinage if 
such rise proved to be permanent. If silver should continue to move upward in 
price, it might be necessary, therefore, to fix a much lower weight and fineness for 
the Philippine coins than would be done if a change were made arbitrarilv at the 
present time to conform to the existing price of silver. It is therefore suggested 
that Congress authorize the Philippine government to make such changes in the 
weight and fineness of coins as they think proper and to recoin at the new weight 
and fineness such of the old coins as they find it advisable to deal with in this 
manner. 

Under a discretion of this sort there would be several possible courses open to the 
government of the Philippine Islands for meeting a further rise in the price of silver 
bullion. They might see fit to issue subsidiary coin at a reduced rate, while permit¬ 
ting the pesos to leave the country under the impulse of their high value as bullion. 
They might decide to reduce both, but to reduce the subsidiary coin more than the 
peso, in order to afford a second line of resistance to an acute rise in silver. On the 
other hand, if the price of silver bullion should not advance further, they might 
not find it necessary to make a change in the weight or fineness of the coins which 
the adoption of a new ratio by Congress at this time would compel them to do. 


COINAGE SYSTEM, ETC., IN THE PHILIPPINE ISLANDS. 283 

With discretion to act in the matter as they see fit, it will be possible for the gov¬ 
ernment of the Philippine Islands to anticipate future demands for silver coin and 
to determine whether only additional stocks of money should be coined at the new 
ratio or whether it might not be necessary to recoin existing stocks. Such recoin¬ 
age at a more favorable ratio for silver would not be a source of expense to the insu¬ 
lar government, but a source of considerable profit. Already the bullion purchased 
for coinage in 1903 and 1904 for 14,745,981 pesos ($7,372,990) at an average cost of 
54.53 cents per ounce, represents, at 67 cents, a profit of 12.47 cents per ounce. These 
figures, moreover, do not include the coinage of new coins from the old Spanish- 
Filipino coins found in circulation in the islands and redeemed by the new govern¬ 
ment. Upon coinage at the rate originally recommended by the Philippine govern¬ 
ment (385 grains 0.835 fine) there would be the difference between 374.40 grains and 
322.15 grains of pure silver to the peso, or almost exactly 14 per cent. This ratio 
would permit the coinage, from the sum of about 39,000,000 pesos now in circulation 
in silver, of about 44,460,000 pesos, and the difference of 5,460,000 pesos ($2,730,000) 
might, after deducting the costs of recoinage, be covered into the Philippine treas¬ 
ury. If coinage at a rate even more favorable to silver were justified by the con¬ 
tinued rise in its bullion price, the profit to the Philippine treasury would be still 
greater. 

In view of the possibility of serious changes in the conditions of eastern exchange 
and the thorough knowledge of the subject derived from experience on the ground, 
it seems to us advisable to leave this matter to the discretion of the Commission rather 
than to arbitrarily fix a new ratio at the present time, if Congress, in the language of 
the new legislation, makes it unmistakable that the government of the Philippine 
Islands shall not modify or impair in any way the existing gold standard of value 
established by the act of March 2, 1903. 

Your committee therefore recommend that said bill do pass. 


[Public— No. 274.] 

An Act To amend an Act approved March second, nineteen hundred 
and three, entitled “An Act to establish a standard of value and to provide for a 
coinage system in the Philippine Islands.” 

Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled , That, with the approval of 
the President of the United States, the government of the Philippine 
Islands is hereby authorized, whenever in its opinion such action is 
desirable, in order to carry out the provisions of section six of the Act 
approved March second, nineteen hundred and three, entitled “An Act 
to establish a standard of value and to provide for a coinage system in 
the Philippine Islands,” to change the weight and fineness of the silver 
coins authorized by said Act, and may in its discretion provide a 
weight and fineness proportionately less for subsidiary coins than for 
the standard Philippine pesos, and may also in its discretion recoin 
any of the existing coins of the Philippine Islands at the new weight 
and fineness when such coins are received into the Treasury or into 
the gold standard fund of the Philippine Islands: Provided , That the 
weight and fineness of the silver peso to be coined in accordance with 
the provisions of this section shall not be reduced below seven hundred 
parts of pure silver to three hundred of alloy. 

Sec. 2. That section eight of an Act of Congress approved March 
second, nineteen hundred and three, entitled “An Act to establish a 
standard of value and to provide for a coinage system in the Philip¬ 
pine Islands,” as amended by section ten of an Act approved February 
sixth, nineteen hundred and five, is hereby further amended to read 
as follows: 

“Sec. 8. That the treasurer of the Philippine Islands is hereby 
authorized, in his discretion, to receive at the treasury of the govern¬ 
ment of the said islands or any of its branches deposits of the standard 
silver coins of one peso authorized by this Act to be coined, in sums 
of not less than twenty pesos, Philippine currency, and to issue cer¬ 
tificates therefor in denominations of not less than two pesos nor more 
than five hundred pesos, and coin so deposited shall be retained in the 
treasury and held for the payment of such certificates on demand, and 
used for no other purpose. Such certificates shall be receivable for 
customs, taxes, and for all public dues in the Philippine Islands, and 
wben so received may be reissued, and when held by any banking 
association in said islands may be counted as a part of its lawful 
reserve: Provided , That the treasurer of the Philippine Islands, with 
the approval of the governor-general, may substitute for any part of 
such silver pesos hereafter deposited, gold coin of the United States 
legally equivalent in value, and redeem the certificates hereafter issued 
in either silver pesos or such gold coin of equivalent value at the 
option of the Treasurer: Provided further. That the amount of gold 
coin held in such reserve shall not at any time exceed sixty per centum 
of the total amount of certificates outstanding.” 

Approved, June 23, 1906. 

284 



CATHOLIC CHURCH CLAIMS IN THE PHILIPPINE 
ISLANDS. 


Committee on Insular Affairs, 

House of Representatives, 
Washington , D. 0 ., Monday , January 7, iP(97. 

The committee met at 10.30 a. m., Hon. Henry Allen Cooper, chair¬ 
man. presiding. 

The Chairman. Gentlemen of the committee, we are here this 
morning for the purpose of hearing the Secretary of War on the 
proposition set forth in the message of the President to pay the claims 
of the Roman Catholic Church in the Philippine Islands, and also 
for the purpose of hearing Governor Ide concerning the proposed 
agricultural bank in the Philippine Islands. We will be glad first 
to hear Secretary Taft concerning the Catholic Church claims. 

STATEMENT OF HON. WM. H. TAFT, SECRETARY OF WAR. 

CATHOLIC CHURCH CLAIMS. 

Secretary Taft. Mr. Chairman, I am very much pleased to be given 
an opportunity for this, and I think that the subject-matter is one 
that calls for prompt action. 

These claims have really been pending for three or four years. T 
attempted to adjust them when I went to Rome to discuss with the 
authorities of the church the question of the purchase of the friars’ 
lands. I attempted to bring into the contract which we hoped to 
make there the settlement of these claims by reference to arbitration. 
That was in 1902, and while additional claims have accrued since 
that, I think that the bulk of them were incurred, or arose, before I 
went to Rome at all. 

The claims are for the occupation of property belonging to the 
church—that is, the Roman Catholic Church—for damages inflicted 
during occupancy. As you gentlemen know, there was but one church 
in the Philippine Islands when we went there, and that was the 
Roman Catholic Church. No other church was permitted. It was 
so intimately connected with the Government that the separation of 
church and state, which was incident to our going there, became a 
matter of the greatest difficulty. A good many questions arose that 
have not yet been settled. It was hoped that if we could make a con¬ 
tract at Rome all of them would have been put in the way of settle¬ 
ment bv arbitration. One very important question that is pending 
is the separation of the various charitable trusts into those which are 

285 



286 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

strictly religious trusts and those which are civil trusts to be admin¬ 
istered by the civil government. Litigation is now pending over the 
, administration of certain trust funds to determine whether the eccle¬ 
siastics who were in charge of the trust funds before we went there 
were really acting as civil agents for the civil government or were 
acting as representatives of the church in the administration of them. 

OWNERSHIP OF BUILDINGS. 

Then another question which has just recently been decided and 
which affects the character of these claims is who was the owner of 
the parish churches and the conventos which were in every village in 
the islands. I suppose that there are 600 or 700 of those towns, and 
in every one of them there is a great church building unless it has 
been destroyed by the war—and what is really a rectory, but what 
is known there technically as a “ convento,” that is, the priest’s house. 
It is the largest house in the village. It is the house where much of 
the entertainment goes on, and the only house that afforded any rea¬ 
sonable shelter and comfort to the American troops when they were 
stationed in these towns and villages. 

No question was made in Spanish days as to the title to these 
churches and conventos. Nor did any rise with any vim or bitterness 
until there w T as a schism in the church. Under an excommunicated 
priest named Aglipav a new church was formed, known as the Inde¬ 
pendent Philippine Catholic Church, which continued all the cere¬ 
monies of the Roman Catholic Church, coupled with a declaration of 
independence of Vatican control. During the war the friars, who had 
occupied most of the parishes as parish priests, were driven into 
Manila. There were some forty of them—perhaps sixty—killed. 
Three hundred were imprisoned, and the feeling with respect to 
them—not as against the church, but as against them as political 
quantities—was so bitter that it was very dangerous for them to go 
out into the parishes at all, and we were anxious that they should not, 
because it meant disturbance. 

Now, the result of all that was that a great many of these build¬ 
ings (the churches and convents that I have described) were aban¬ 
doned, and there was no authorized occupant of them, and in those 
towns in which the Aglipayan schism had great sway the Aglipayans 
moved into the churches and just took possession, and they did so fre¬ 
quently under resolutions of the municipal councils authorizing this 
to be done, on the theory that the municipalities owned the churches 
and the conventos. That was based on the proposition that the 
churches were built on the plaza, which was municipal or public 
property. As a matter of fact, it will probably turn out that the 
churches were built first and that the plaza was then built long after¬ 
wards. But it appeared to be public property, and there had been no 
change of title. 

Under the Spanish concordat the Spanish Government was pledged 
to furnish churches and conventos and to contribute to the salaries’of 
the priests, and so the claim was made by these Aglipayans, who had 
moved into the churches and taken possession of them, that they were 
there under authority of the lawful owner, to wit, the municipality, 
and they declined to get out on the demand of the Roman Catholic 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 287 

authorities. The Roman Catholic authorities thought that the execu¬ 
tive was very lacking in proper respect for vested rights because 
we did not send the constabulary there to put them out. But we ex¬ 
plained that the issue was a matter of title to the property and that it 
must be tested in the courts, and special acts were passed for the pur¬ 
pose of speedily bringing that question into the courts. The supreme 
court in a test case decided- 

TITLE DECIDED BY SUPREME COURT OF THE PHILIPPINES. 

The Chairman. The supreme court of the Philippines? 

Secretary Taft. Yes, sir. The supreme court of the Philippines 
has decided what I always thought to be the law—and I did not hesi¬ 
tate to say so iii official documents—to wit, that without respect to 
the legal title of that land, in equity the land belonged to the Roman 
Catholic Church, and the buildings on it belonged to the Roman 
Catholic Church, as having been in use for the benefit of the Roman 
Catholic Church in the village in which the church and conventos 
were constructed. The supreme court of the islands has decided 
that to be the law, and the claims which are made here and the pay¬ 
ment of which is recommended are claims for occupancy of those 
churches and those conventos by the troops of the United States dur¬ 
ing the period from our occupancy in 1898 down to the time when 
the claims were presented and the report made. 

It is just a civil claim. There is not the slightest doubt of the 
liability of the Government for the rent, at least after the occupancy 
ceased to be one of emergency during the train of war, because the 
property was theirs. The occupancy was ours, and there was an 
implied contract to pay. 

Mr. Crumpacker. Mr. Secretary, does not the law recognize a lia¬ 
bility where a belligerent takes the property of a noncombatant, even 
in emergencies ? 

Secretary Taft. Yes. 

Mr. Crumpacker. Do these claims cover the period when their le¬ 
gality was pending in the courts? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. Ought not that claim to begin after the supreme 
court in Manila had determined the ownership ? 

Secretary Taft. No; the supreme court at Manila did not deter¬ 
mine the ownership until just now, but they determined the owner¬ 
ship as of the time covered by these claims. 

Mr. Crumpacker. What investigation has been made respecting 
the rents? 

Secretary Taft. I am coming to that. 

Mr. Parsons. May I ask a question there ? Do these claims cover 
any period before 1899, when the insurrection began? 

Secretary Taft. No, sir. I should say, however, that they do for 
the cathedral of Manila. Before the 4th of February, 1899, you re¬ 
member, we did not have any occupancy of the islands except the 
city of Manila, and we used the cathedral of Manila for the custody 
of Spanish prisoners, and inflicted considerable damage on the cathe¬ 
dral. The amount here charged is upward of $0,000—a very small 
amount, I think, for an occupancy of so many months and under 
circumstances inflicting so much damage on the cathedral. 



288 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Olmsted. May I ask one question while your statement is in¬ 
terrupted ? You said that 300 of these priests were imprisoned. By 
whom were they imprisoned ? 

Secretary Taft. By Aguinaldo. 

Mr. Olmsted. Not by our people? 

Secretary Taft. Oh, no, sir. 

Mr. Olmsted. Would not that lend color to the thought that we 
were protecting their property? If Aguinaldo was attacking the 
priests, did not their property need our protection ? 

Secretary Taft. Undoubtedly. If it had not been for us I do not 
know what would have happened to the friars. 

Mr. Jones. When was this decision of the supreme court of the 
Philippine Islands of which you speak rendered? 

Secretary Taft. It was rendered, I think, about six weeks ago. 

Mr. Jones. Was it unanimous in the court? 

Secretary Taft. Yes, sir. I should qualify that. I say it was 
unanimous, but I understand that there was one member of the court 
who had doubt about it—a Virginian. 

Mr. Jones. Judge Carson? 

Secretary Taft. Yes. But whether he has handed down a dis¬ 
senting opinion or not, I do not know. 

Mr. Jones. Mr. Secretary, that was the question as to the owner¬ 
ship of all the church property as between the Roman Catholic 
Church and the independent native church involved in that decision. 

Secretary Taft. Yes, sir; as I understand it, a typical case in ref¬ 
erence to—it related to several towns. 

The Chairman. On what theory did the Aglipayans claim title 
to those churches? 

Secretary Taft. They did not claim title to them. They took pos¬ 
session, but they claimed to be protected and to be holding under the 
title of the municipalities, 

Mr. Jones. I have always understood that in those localities where 
the Aglipayans constituted the vast majority of the membership of 
the church they have claimed ownership on the ground that the 
churches were not built by the Roman Catholic Church, but were 
built by contributions from the natives and work performed by the 
natives. 

Secretary Taft. That is true. 

Mr. Jones. And that the churches therefore belonged to them and 
not to the Roman Catholic Church. 

Secretary Taft. No; you will find that when you get into the liti¬ 
gation that that enters into the question of whether the municipality 
owns the churches or the Roman Catholic Church. Their theory is 
this: That these were municipal churches, and that all the people 
contributed by contributions of labor, just as they would by taxes, 
to the municipality, and, therefore, that the churches and conventos 
belonged to the municipality for such religious worship as the people 
of the municipality preferred, and that they might change from 
the Roman Catholic Church to the Aglipayan Church if they chose. 

Mr. Jones. Do you know whether or not in this particular case the 
membership of that church was composed mostly of natives who be¬ 
longed to the independent church or of those yvho belonged to the 
Roman Catholic Church? 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 289 

'Secretory Taft. I do not know as it would make any difference. 
Doubtless the question arose between the municipality and the Roman 
Catholic Church. 

Mr- Jones. I understand that your opinion was, before this case 
w r as decided, that the people in possession of the churches should not 
be disturbed. 

Secretary Taft. Yes, sir. 

Mr. Jones. If they belonged to the independent church, they were 
in the majority. They had the priests and they were in control of 
the church, and they were not to be disturbed. 

Secretary Taft. It w T as not because they were in the majority, but 
because they were in possession; and as it w r as a question of posses¬ 
sion, it was not for the executive to pass on that subject. 

Mr. Jones. But, as a matter of fact, when they were in possession 
they were in the majority, usually? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. This test case having been decided by the su¬ 
preme court, was it a case which had been appealed? 

Secretary Taft. No; it was heard in the supreme court by a 
special act. 

Mr. Parsons. What did the concordat require as to the erection 
of churches? Did it require the Spanish Government to erect 
churches in the Philippines? 

Secretary Taft. Yes, sir. We must very clearly understand w^hat 
Catholicism w 7 as in the islands. The Vatican turned over to the 
Spanish King almost complete control of the church in the Philip¬ 
pines., in view of his obligation to see that churches were erected and 
the priests were paid, and I think that that may possibly explain the 
reason why the monastic orders that had their headquarters in Spain 
exercised such control over the church in the Philippines—rather 
more, probably, than in any other place where the Vatican had 
churches. 

Mr. Parsons. Has there been any contention that the title to any 
of these churches belonged to the monastic orders? 

Secretary Taft. No, sir; well, there are churches, or rather con- 
ventos, that do belong to them, but these are parish churches. I want 
to say that many of the claims are of this character, but they are dis¬ 
tinguished by the Judge-Advocate-General in his review. You will 
find that there are claims on behalf of some of the monastic orders 
for occupancy of some of their buildings, but that is a much smaller 
part of the amount, and it is not included in the $363,000. 

Mr. Gilbert. Has the War Department any copy of the record of 
that test case? 

Secretary Taft. No, sir; not yet. It will doubtless come. I have 
had a letter from one of the judges, telling me the general lines of 
the decision; but that is all. It is from that letter that I under¬ 
stood there would probably be filed a dissenting opinion. 

The Chairman. The court consists of seven members ? 

Secretary Taft. Yes, sir. 

The Chairman. And there were six concurring in the majority 
opinion ? 

Secretary Taft. Yes, sir. There is the chief justice, who is a 
Filipino; there are four Americans and two more Filipinos. Three 
Americans and three Filipinos sustained that view. 

35815—08-19 


290 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Jones. Do you know what is the religious complexion of the 
court ? 

Secretary Taft. Three are Protestants, one an American Catholic, 
and three Filipino Catholics. 

Mr. Jones. The Filipino Catholics, however, do not belong to the 
independent church; they all belong to the Roman Catholic Church, 
so that there are four Roman Catholics and three Protestants on the 
court ? 

Secretary Taft. Yes, sir. 

AGGREGATE OF CLAIMS. . 

The Chairman. What w r as the aggregate of the claims, Mr. Sec¬ 
retary, originally? 

Secretary Taft. You mean for this- 

The Chairman. Occupancy, etc. 

Secretary Taft. I think they went up to $2,000,000. 

The Chairman. There was a commission appointed, I believe, to 
investigate and report? 

PROCEDURE IN INVESTIGATION OF CLAIMS. 

Secretary Taft. Judge Crumpacker asked me what the form of 
procedure was with reference to these claims. As soon as I reached 
the islands, in 1902, or very shortly after that, I called on Mon¬ 
seigneur Guidi, who was apostolic delegate, and asked him to present 
the claims. Then I requested the Secretary of War to direct the 
commanding general over there to delegate somebody to look into 
the question of the claims, and all the officers spread all over the 
island were directed to investigate the question of the claims. There¬ 
after, when I came back, I directed the appointment of a board on 
church claims, consisting of officers, and that board sat and consid¬ 
ered the claims. It considered the evidence presented by the agent 
who had been selected to look into them (an army officer), and it has 
made its report on that evidence thus presented. 

The Chairman. Can you give the names of that board ? 

Secretary Taft. Colonel Hull, of the Judge-Advocate’s Corps, was 
the chief. Colonel Brodie, of the Military Secretary’s office, was 
another, and then there was Major Gibson, who acted as recorder of 
the board, of the General Staff. I think that the officer who made 
the investigation and conferred a great deal with Monseigneur Guidi 
was Major Fremont, but there were other officers, too, so engaged. 

INFLUENCE OF THE CHURCH. 

The truth is that one of the great disasters to the Philippines has 
been the destruction of the Roman Catholic churches. The church 
there is an instrument for the preservation of peace and good order. 
It is of the utmost governmental importance, and I should be sus¬ 
tained. I am looking at it purely from a secular standpoint. Now, 
the church must have sustained a loss—I have an estimate from the 
board, which was ordered to make a recommendation—and the dam¬ 
age sustained in the train of war by the churches amounted to 
$600,000, in round numbers. The damage by the insurgents $800,000, 



HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 291 

and that in addition the churches were robbed of articles of cult and 
ornamentation amounting to $300,000, and all that in addition to this 
$363,000. 

The Chairman. This $363,000 was the amount which the board 
found to be due ? 

Secretary Taft. Yes, sir; the amount they found was due from 
the Government. I think that you have had precedents in your ap¬ 
propriations for charitable and church organizations during the civil 
war, in which you assisted the churches and the educational institu¬ 
tions that were destroyed in the train of war, on the ground that 
their management was loyal. I do not think it would be at all un¬ 
fair—indeed, I think it would be greatly to the interest of the Gov¬ 
ernment—if you were to increase this amount of $363,000 so as to 
include some elements of that kind. The church has been thrown on 
its beam ends by this destruction, by reason of the fact that the sup¬ 
port of its priests has now been withdrawn. They are a people very 
dependent on their church, very much influenced for good by their 
church, and yet they have never contributed to the church as people 
in this country are in the habit of doing. The consequence is that 
these losses which the church has sustained it is almost impossible for 
the church to repair, and that is what I had in mind. I think that 
the President points that out in his letter of transmittal. In my 
letter to the President I say: 

The sum reported by the board of officers is very small in proportion to the 
actual loss suffered by the Roman Catholic Church in the islands. A great 
deal of destruction was done during the war of the insurrection, both in the 
train of war and by the deliberate plan of the insurrectos to injure the build¬ 
ings that they thought might be useful to the American forces. I have directed 
the commanding-general of the Philippine Division to reconvene the same board, 
or convene another for the purpose of reporting on the total damages to the 
Roman Catholic churches in the islands by reason of the war, and the damage 
inflicted to the property of the church by the insurrectos. I have done so be¬ 
cause I conceive that it might be well in the public interest, under precedents 
already set in this country by Congressional assistance to educational and re¬ 
ligious institutions suffering from the destruction of war in the South, that a 
sum additional to that herein recommended for payment might be appropriated 
to aid the church, the authorities of which were always loyal to the United 
States in the islands during the insurrection. 

The Roman Catholic Church is exceedingly important in the secular life of 
the islands as a restraining and uplifting influence for the Philippine people, 
and the deplorable condition in which it finds itself by reason of the destruc¬ 
tion of the war of the insurrection appeals strongly to anyone interested, as the 
Government of the United States is, in the maintenance of order and the moral 
welfare of the people. 

Of course I do not know how 7 that will strike the committee or 
Congress. Personally I would not hesitate, and would be glad if 
the responsibility were my own, to bring aboM an appropriation 
larger than the claims here presented of $363,000. But, with re¬ 
spect to that sum, there is not the slightest doubt that the Govern¬ 
ment owes it and ought to pay it as promptly as possible. 

RECOMMENDATION OF BOARD. 

The Chairman. I do not know that you mentioned the original 
amount of the claims presented to the board. It was approximately 
$ 2 , 000 , 000 . 

Secretary Taft. And they reduced it to $363,000. I do not know 
whether you have my communication here or not. 


292 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

The Chairman. I have one • statement which shows the character 
of one of the reductions. For instance, the claim of a bishop for 
1*554,785 Spanish—about $227,000 in gold—for a church occupied 
by insurgents and shelled by United States artillery, set on fire, and 
destroyed. Colonel Hull and his associates say that no recovery can 
be had on that claim. That sort of reduction brought the total down 
from $2,000,000 or over to $363,000. 

Secretary Taft. You have the printed document, have you not? 
Perhaps it is a Senate document. 

The Chairman. I have the President’s message (S. Doc. No. 11). 

Secretary Taft. And you will find on page 2 of that document 
the rules which I laid down to govern the board in reaching the con¬ 
clusion which they did reach. 

LOYALTY OF CHURCH. 

Mr. Jones. Mr. Secretary, I observe that the President speaks of 
the loyalty of the authorities of the church to the United States 
Government. Has there not been some question as to that? 

Secretary Taft. Only as to the native priests; not with reference 
to the church authorities. 

Mr. Jones. It seems to me that I have seen it stated in one of the 
histories of the Philippine Islands that this head of the independent 
church, Archbishop Aglipay, was sent by the Catholic authorities 
to Aguinaldo* with a proposition that they would join with him 
against the United States—something to that effect. Have you 
not heard that statement? 

Secretary Taft. No, sir; I am quite sure that that is not true. 
What did happen is this, that Aglipay was sent, possibly, or Avent, 
at any rate, Avith the idea of intervening to sa\ T e the friars. It is 
possible that the church had something oi that sort in mind, but the 
excommunication of Aglipay arose, as I understand it, from his re¬ 
fusal to obey the order of the Archbishop of Manila to present him¬ 
self and come away from Aguinaldo. He first exercised his function 
as a kind of pope at Aguinaldo’s court, and then became subsequently 
a partisan and guerrilla leader of the guerrillas of northern Luzon. 

Mr. Jones. Yes; but my understanding is that prior to this time 
of the beginning of the insurrection that they sent to Aguinaldo and 
said to him, “ You stand in with the Spanish forces, and so the Span¬ 
ish Government will make certain concessions to the Philippines,” and 
that he Avas the means of communication between the church authori¬ 
ties and Aguinaldo. 

Secretary Taft. No; I think that you will find this to be the case, 
and it is alAvays well to bear it in mind, that Aguinaldo’s govern¬ 
ment—such government as he had—was in existence for a number of 
months—perhaps eight months—w T hen the course to be pursued by 
this country was altogether uncertain, and we Avere not at war with 
him, and AA^hen, therefore, the anxiety of the church to pre\ r ent acts 
of confiscation which Avere passed by the parliament called by Agui¬ 
naldo Avas AA'hat the church Avanted to preA^ent, and they may have 
desired to use Aglipay for that purpose. But that was all before 
February, 1899, Avhen there was in the Philippines not only Agui¬ 
naldo’s forces, but the forces of the United States, 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 293 

Mr. Jones. My information is that it was prior to that time. 

Secretary Taft. So that it could not be called an act of disloyalty 
if the church was trying to prevent the property of the church from 
being confiscated at that time. 

Mr. Jones. This was about the time, as I understand it, when 
Aguinaldo was supposed to be acting with the United States, and' we 
desired to secure his assistance and cooperation against the Spanish 
forces ? 

Secretary Taft. Yes. 

Mr. Jones. They took the Spanish side? 

LOSSES DUE TO INSURRECTION. 

Secretary Taft. Oh, naturally. In the Spanish war there was no 
doubt that the church authorities were all in favor of Spain and not 
of the United States. That was a condition of war. I am referring 
now to the losses sustained by the church. The church did not sus¬ 
tain any considerable loss during the Spanish war. The losses sus¬ 
tained were the losses sustained in the insurrection which followed in 
1899. The general who was one of the insurrectos—what was his 
name? 

Mr. J ones. Luna ? 

Secretary Taft. Yes; Luna. Luna pursued this policy. He had 
an impression that the Americans w T ere dependent on the churches 
and conventos for places of occupation, and as he marched north, be¬ 
ing driven north by McArthur’s forces and Lawton’s forces, he de¬ 
stroyed with powder, as far as he could, every church and every 
convento in the line of his march, and it was during that time that 
so much loss was inflicted. A similar policy was pursued elsewhere, 
but he was the one who introduced it. 

The Chairman. But tljis commission does not propose to pay for 
such damages? 

Secretary Taft. Such losses are not included in this total. 

The Chairman. Where is the testimony taken before that com¬ 
mission ? 

Secretary Taft. It is on the sea. I ought to explain to the com¬ 
mittee the situation with respect to that. I have the correspondence. 
It is an instance of how some things work. I directed, in order 
that the committee might consider this other equity which I think 
exists, that a report or general losses be made in order to give the 
committee an idea of the losses which the church had sustained 
and the causes of those losses, and they cabled me that they could not 
do it unless the evidence which had been sent here was returned to 
them, and I then directed that the evidence be sent back. I thought 
that between the adjournment of Congress and its meeting again 
there would be plenty of time. Well, it seems that this evidence 
was in a dry-goods box, and that The Military Secretary, instead of 
sending it by mail, turned it over to the Quartermaster-General for 
transportation by him, and that the quartermaster who had charge 
of it, not being jware of the character of the freight, concluded 
that it might jus: as well go by slow freight, and it went by a tramp 
steamer which had been employed by the Quartermaster’s Depart¬ 
ment, and it took three months" to get from Washington to Manila. 


294 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

In the meantime we spent a good deal of money in cables trying 
to find out how it was that it went by the steamer Satsima. 

The Chairman. It went by the Suez Canal, did it not? 

Secretary Taft. Yes, sir; it went by the Suez Canal, but it did 
not reach Manila until the 3d of December. I rather warmed up 
the wires with cables on the subject when I found out what 4 had 
been done, and it was mailed or sent by transport on the 4th of this 
month, I think, and it will be here, I hope, by the 4th or 5th of 
February. 

Mr. Olmsted. Will there be in that record, Mr. Secretary, the 
details showing the items of which this $363,000 is composed ? 

Secretary Taft. Yes, sir. There is a report here showing that 
detail, which I have transmitted. 

The Chairman. I have it right here. 

Mr. Olmsted. Does that show the items in detail and the amounts? 

Secretary Taft. Yes, sir. It has the claims as presented by the 
church authorities and the recommendations of the board. I think 
that the reports of the officers themselves are in this batch of 
papers. They are so voluminous as to have to be carried in a dry- 
goods box. 

payment of money. 

Mr. Olmsted. In the event that Congress should appropriate this 
money, to whom should it be made payable? 

Secretary Taft. I think that it should be made payable to the head 
of the church in the Philippines. 

Mr. Olmsted. With or without any requirement as to the putting 
up of churches or conventos in the islands? 

Secretary Taft. I think that it ought to. I suppose that you 
might limit its use to the construction of churches in the islands if 
you choose. Of course, it is a debt due, and I suppose that the people 
who are entitled to it are entitled to use it* as they choose after they 
get it, but, being a governmental debtor, perhaps you can impose any 
restriction you choose. 

Mr. Olmsted. I want to know what you think as to whether it 
would be wise or not. 

Secretary Taft. I doubt it as to what is legally due. 

Mr. Crumpacker. I understand the situation to be this: This com¬ 
mission has investigated and reported these claims, and reported a 
liability of $363,000 on the basis of a liability which is shown for the 
appropriation and occupation of the property of noncombatants in 
time of war. 

Secretary Taft. Yes, sir. Understand me that this claim covers 
a period long after any war. This comes down to 1905, I think. 

Mr. Crumpacker. The property occupied by our troops and dam¬ 
aged, as I understand, in the way of occupancy ? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. The commission rejected all claims for damages 
that were inflicted by the insurrectionary forces? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. All claims for damages inflicted by our forces as 
necessary incidents to this war? 

Secretary T^ft. Yes, sir. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 295 

Mr. Crumpacker. As, for instance, occupancy of church property ? 

Secretary Taft. Yes, sir. To illustrate: There was a church at 
Guadaloupe containing a most valuable library. It was built, as all 
those churches are, very like a fortress, and the insurrectos occupied 
it, and our military had to train their artillery against it, and the 
church and the library were destroyed, and everything else. 

Mr. Crumpacker. I do not believe that Congress has ever recog¬ 
nized claims of that character. It is one of the incidents of war and 
property destroyed incidentally during the activities of Avar. I do 
not have in mind an instance of where Congress has made any recom¬ 
pense in such a case, but your idea is- 

Secretary Taft. My impression is that Congress allowed a claim 
for William and Mary College. 

Mr. Crumpacker. That was for occupancy, was it not ? 

Secretary Taft. No; I think that it was destruction of buildings, 
was it not, Mr. Jones? 

Mr. Jones. There haA T e been several claims of that kind paid by 
Congress. 

Mr. Olmsted. That was a claim paid to the Methodist Church. 

Secretary Taft. Yes, sir. 

Mr. Jones. There have been several claims paid for churches in 
the South; two or three dozen of them. 

Mr. Olmsted. I understand that this $363,000 is for occupancy 
after the actiAuties of war had ceased. 

Secretary Taft. Yes. 

Mr. Jones. And for damages done during that occupancy. 

Mr. Crumpacker. Is'it limited to this question? 

Secretary Taft. It is limited to occupation during peace, but it 
is for occupancy and for damage accruing through that occupancy. 

Mr. Crumpacker. The question for the committee to determine is 
whether it will pay this, and whether it will pay anything for dam¬ 
ages inflicted by the insurrectionary forces; second, Avhether it will 
allow anything for damages in subduing the insurrectionary forces. 
That is the problem. 

Secretary Taft. Yes, sir; that is the proposition. 

Mr. Jones. And also to whom the money Avill be paid, if it be paid. 

Mr. Crumpacker. If we add anything to these two factors that I 
have suggested, I think that it will be simply a recognition of a sort 
of an equitable claim, a rather vague one, and we might impose con¬ 
ditions. In relation to this $363,000, I do not think that it would be 
proper to impose conditions at all. 

Secretary Taft. I doubt if it would. Now, Avith reference to that. 
Properly speaking, these claims, considering the character of the 
ownership of the property—I mean from the legal standpoint—sup¬ 
pose the claims are due to the Roman Catholic Church, but they arose 
from the destruction of property that was held by the Roman Cath¬ 
olic Church in trust for congregations in the particular villages 
where the destruction was effected. Generally under the canon law 
of the Roman Catholic Church the title of these churches is in the 
bishop of the diocese, and, generally, claims of that sort Avould be 
paid to the bishop of the diocese, though I think that it would be 
better, as a matter of general policy, if Ave could reach the conclusion 
that it Avas right to pay it generally to the head of the church in the 



296 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

islands, because it would be more likely to have fairer application and 
distribution. But of course-that is a matter that addresses itself to 
the committee- 

Mr. Olmsted. That is what I wanted to get at. I know very little 
of the internal workings of that church, but I know that the Bishop of 
Harrisburg, where I live, has control of the church property. It 
stands in his name. 

Secretary Taft. Yes, sir; it generally stands in his name without 
any words at all. And it was decided in the “ Ohio case,” you re¬ 
member, where Archbishop Purcell and his brother, Father Edward, 
established a kind of a banking place and involved themselves in an 
enormous debt, which they could not pay out of the funds which they 
had. The question then arose as to whether the church property, 
which stood in the name of the archbishop without any trust on its 
face at all, was subject to the debts thus incurred, and the supreme 
court of Ohio decided that it was not. They could follow the money 
into the church in which it had been put, but they could not take the 
money belonging to the church, though in the name of the bishop. 

Mr. Olmsted. Suppose instead of a Philippine church building it 
had been the church building at Harrisburg that had been occupied, 
the church whose property stands in the name of the bishop; that 
would be the part of the organization that suffered the loss. Now, 
then, if that loss is to be paid, ought we not to make provision to see 
that it goes to the church of Harrisburg, or to the equivalent organiza¬ 
tion in the Philippines? 

Secretary Taft. You could’ do that by making it payable to the 
bishop of the diocese, for payment to the particular church. 

Mr. Olmsted. Would that not be the proper way? 

Secretary Taft. It would certainly not be an improper way. 

The Chairman. I have read the claim No. 13. It says: “ Bishop 
Rucker has abandoned this claim for action' taken on another claim.” 

Secretary Taft. That is true. All the bishops appeared before this 
board and filed claims in their respective dioceses. 

The Chairman. There is another important point revealed here. 
Claim No. 16. This is the language of the commission you appointed: 
“As the destruction was an incident of war, it is recommended that 
nothing be paid.” 

Mr. Crttmpacker. They followed the law. 

Secretary Taft. They did. They followed the rules as I gave them 
in nry letter printed here. 

Mr. Graham. You say that it would be decidedly improper to pay 
this money over- 

Secretary Taft. No, sir; it would not be improper. It would add 
very much to the convenience if you could give it all to the head of 
the church, so that it might be spent with discretion and aid the entire 
church in the islands. 

The Chairman. Do you mean to Archbishop Harty by name, as 
archbishop of the Philippines? 

Secretary Taft. It might be paid to him. But whether you can 
do it legally or not is, perhaps, a matter of doubt. They can make 
a large fund go much further, if they have it in one fund, than if it 
is in driblets. 

The Chairman. Are these claims in such a form so that if we 
make an award in accordance with the findings of this commission 



HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 297 

we could specify the amount to go to each bishop by looking through 
the record? 1 J 6 

Secretary Taft. Oh, yes; because you can tell. It is all with Refer¬ 
ence to the towns, and the towns are shown by the report to be in 
particular dioceses. 

Mr. Crumpacker. Suppose that we should make this appropria¬ 
tion, and should instruct the money to be paid to the head of the 
church in the archipelago, that is not the depository of titles; the 
titles belong to the bishops. 

Secretary Taft. Yes; where there is a local diocese there is gen¬ 
erally a legal title. 

Mr. Crumpacker. In a legal sense, if the money were paid to the 
bishop it would not be paid to the person who has suffered the loss. 

Secretary Taft. You could do this, because in the Roman Catholic 
Church the Pope is the head of the church, and has all the bishops 
under him; you pay it to the persons whom the head of the church 
would designate as proper persons to receive it in the islands. 

Mr. Crumpacker. Now, Mr. Secretary, that is the ecclesiastical 
side of the question. We are dealing now with the l^w side of it, 
and so far as the law and jurisprudence go it would seem to me that 
the bishops are the only ones who have any claim against the Govern¬ 
ment, and payment to anyone else would extinguish every claim. 

Mr. Olmsted. Suppose there was a mortgage or judgment, then 
the payment to any other authority would not release the claim of 
the bishop. 

Secretary Taft. I have no doubt that whatever way you do it, the 
matter could be so arranged that the Government would secure full 
release from everybody. If you would leave it to the action, for in¬ 
stance, of the War Department, to see that the release of all possible 
claimants should be filed before the money was paid, the Government 
could in this way be entirely protected. In other words, no money 
would be paid to any town until the bishop of that town should ac¬ 
knowledge receipt and direct its payment to some one. 

Mr. Olmsted. How many dioceses are there ? 

Secretary Taft. The diocese of Nueva Segina, the diocese of 
Manila, the diocese of Nueva Caceres, the diocese of Iloilo, or Jaro, 
as it is called, and the diocese of Cebu. 

Mr. Graham. It would not be much of a task to put it into the 
hands of the bishop ? 

Mr. Rucker. As I understand, the total amount of these losses is 
something like $2,500,000 ? 

Secretary Taft. Yes, sir. 

Mr. Rucker. The amount recommended by the commission was 
based upon the legal liability. It is $360,000. 

Secretary Taft. Yes. 

Mr. Rucker. Your suggestion, and also the President’s suggestion, 
is that we might in equity allow a larger sum to cover some claims 
which are not legal, but which have a strong equity. 

Secretary Taft. You will find, in looking into the claims, that the 
church authorities have had great difficulty in getting evidence. 
Time has passed and the conditions were so disturbed that it was 
difficult for them to secure that character of legal evidence that the 
commission necessarily required in passing on the question. 


298 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


Mr. Rucker. I was going to ask to what extent you would recom¬ 
mend this generosity on the part of the Government, toward those 
people who seemed to have claims based on equity ? 

Secretary Taft. As one very much interested in the Philippine 
Islands, I would be glad to see the claim doubled. 

Mr. Rucker. Assuming that Congress would double the amount 
of the legal liability of the Government, leaving the sum of $860,000 
to be distributed among these claimants in proportion to the equities, 
by whom would the payment be made? 

Secretary Taft. I would be glad to leave it to the archbishop of 
Manila. He is the most successful administrator of the church. 
He is a man who has entered into the spirit of the business. 

Mr. Rucker. Would you think it safe to leave that large amount 
of money, upon which there is no legal liability, but a very great 
equity, to him and allow him to determine the equities of the dif¬ 
ferent claimants? 

Secretary Taft. I think probably he could do that better than any¬ 
body else. 

Mr. Rucker. Don’t you think he should make suggestions as to 
where the stronger equities are and let Congress determine the ques¬ 
tion as to payment? 

Secretary Taft. I think that with respect to the amount that may 
be allowed merely as an equity, Congress ought to impose a trust 
with respect to its distribution. 

Mr. Parsons. Have you received the second report of the board of 
officers ? 

Secretary Taft. I have only a cablegram, which I would be glad 
to read and leave with the committee, if I may be permitted to do so. 

The cablegram was read as follows: 

[Extract from cablegram received at the War Department January 4, 1907, 9.20 a. m.] 

The Military Secretary, Washington: 

Board church claims reported January 3. Papers forwarded by registered 
mail same day. Owing to limited time, estimate is of hurried nature and not a 
real determination of the facts involved. All sums expressed in dollars, United 
States currency. Estimate train of war, $597,715; damages by insurgents, 
$802,180. In addition church claims for loss by robbery, etc., articles of cult 
and ornamentation amounting to $298,150. On this item board reports not in 
the possession of adequate facts on which to base estimate of actual money loss; 
also church claims for cash seized by insurgents or as contribution to the so- 
called national loan, $57,467, and for value of supplies, same cause, $8,500. No 
estimate of actual loss made under last two heads on account of limited evi¬ 
dence and nature of claims. 

******* 

Wood. 

Secretary Taft. I have a previous telegram in which General 
Wood says he thinks the board had visited every part of the island 
in an attempt to make up those claims except one diocese. They had 
expected to visit this one in January. 

The Chairman. A second time? 

Secretary Taft. Yes. Of course I shall transmit to Congress at 
once this evidence as soon as- it comes back. Its delay has made a 
most exasperating condition of affairs. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 299 

Mr. Rucker. When is it likely to be here? 

Secretary Taft. Not before the first week in February. 

The Chairman. On what boat was it? 

Secretary Taft. It is on a transport coming direct by way of San 
Francisco. I will have it forwarded by express when it reaches San 
Francisco. 

Mr. Parsons. There will be a formal report in regard to the 
claims ? 

Secretary Taft. Yes. 

OCCUPATION OF CATHEDRAL AT MANILA. 

The Chairman. How long did our troops occupy the cathedral in 
Manila ? 

Secretary Taft. Seven months. You will find it in the first re¬ 
port. The rental is at the rate of P300 per month, amounting to 
P10,500, and the damages are estimated at PI,050. I think that is 
a very small rental for a building like the cathedral. 

The Chairman. The damage to the woodwork was only $500? 

Secretary Taft. Yes. 

The Chairman. That speaks well for the troops. 

Mr. Rucker. If it was in America the claim would be bigger than 
that. 

Secretary Taft. Certainly the buildings occupied by the Govern¬ 
ment since in Manila have involved the payment of vastly higher 
rentals than $750 per month. 

Mr. Rucker. They are becoming Americanized over there. 

Secretary Taft. Yes.. 

Mr. Gilbert. The cathedral is quite an imposing structure, is it 
not? 

Secretary Taft. Yes; it is a very large one. It has somewhat the 
form of a fortress, and they used it as a prison. 

FRIAR CLAIMS. 

Mr. Parsons. The judge-advocate says there is a separate claim in 
regard to the' friar cases. Does he mean that there will be still another 
report in addition to the report of the commission ? 

Secretary Taft. I think that is a small matter. It is some time 
since I have looked at it, and my impression is it has reference to a 
separate report made by him. Two reports were submitted, one cov¬ 
ering the church property, and the second covering the friar prop¬ 
erty. I think that has reference to a report he is to make on the friar 
property. [Reading:] “ The first report will be considered alone in 
this report. A second report will be made in respect to the friar 
cases.” This does include a statement of the friar cases, but when 
examined separation can be made. 

Mr. Parsons. The $260,000 claim referred to the church claims 
alone ? 

Secretary Taft. Yes. 

Mr. Parsons. There will be additional claims for the friar prop¬ 
erty? 


300 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


Secretary Taft. Yes; but they do not amount to a great deal. 

Mr. Parsons. Those claims have no reference to the friar lands ? 

Secretary Taft. No; the friar lands are a different thing from 
buildings and churches. The friar lands are agricultural lands, and 
the only buildings bought in connection with those lands were the 
plantation buildings. They had nothing to do with property owned 
by the friars, because the friars owned some business property in 
Manila. 

The Chairman. We will continue the hearing to-morrow morning 
at 10 a. m. on the question of the proposed, agricultural bank in the 
Philippines. 

Adjourned. 


RAILROADS AND AGRICULTURAL BANK IN THE PHIL¬ 
IPPINE ISLANDS. 


Committee on Insular Affairs, 

House of Representatives, 

Tuesday , January 8 , 1907. 

STATEMENT OF HON. HENRY C. IDE, EX-GOVERNOR OF THE 
PHILIPPINE ISLANDS. 

The Chairman. Governor, just a word about yourself, personally. 
You were in the Philippine Islands for how long? 

Governor Ide. I went out with the Taft Commission in April, 
3900, and I was a member of the Commission until the 20th day of 
September, 1906. I was made secretary of finance and justice upon 
the organization of the civil government and performed the duties 
of that office down to the time that I left. Governor Wright went 
away in October, 1905. Having been made vice-governor a year or 
two before, I performed the duties of acting governor-general and 
was subsequently made governor-general, so that during the last year 
I had the duties of governor-general and secretary of finance and 
justice to perform. 

That has been my connection with the civil government in the 
Philippines. I left there on the 26th of September, 1906, and arrived 
at San Francisco about the 1st of November last. 

The Chairman. During your residence in the Philippines you have 
traveled over the archipelago pretty thoroughly, have you not? 

Governor Ide. Yes; I have been in nearly every province at one 
time or another, and in many of them several times. 

The Chairman. What is being done toward carrying out the pro¬ 
visions of the railroad act which we passed here two or three years 
ago? 

PHILIPPINE RAILROADS. 

Governor Ide. To state it as briefly as I can, advertisements were 
published in the Manila papers and also in papers in the United 
States, for tenders upon certain defined lines and within certain 
limitations, such as were substantially marked out by the act of 
Congress. Advertisements were issued for tenders for between 1,100 
and 1,200 miles of railroad. 

The conditions that the railroad corporations were to comply with 
were set forth in the advertisements, which were made in accordance 
with legislation by the Philippine Commission. The bids were to be 
opened on the 20th day of December, 1905. On that day they were 
duly opened, and it was found that for quite a number of the lines 
for which we had asked competition no bids had been tendered, par¬ 
ticularly lines that would run from central Luzon over across the 

301 



302 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

mountains in a northeasterly direction and down the Cagayan Val¬ 
ley to Aparri; and likewise lines in Leyte and Samar. The last two 
quite probably were not bid for because of the disturbed conditions 
in those provinces, although thej^ are very rich and promising, and 
ultimately will furnish very excellent support, in my opinion, for 
railroads. But it was found that the bids departed in many material 
respects from the conditions laid down in the advertisements, and to 
such an extent that the different bidders were not competing for the 
same thing, as one would be bidding for the construction of roads on 
certain terms not authorized, and the other on other terms not au¬ 
thorized ; and, therefore, some modifications that were deemed expedi¬ 
ent were made in the advertisements, and readvertisements occurred, 
and the tenders were to be opened on the 20th day of January, 1906. 
When they were opened it was found that there were practically but 
two bidders— one of these for lines in Luzon and the other for lines in 
Panay, Cebu, and Negros. The bids then were within the limitations 
of the advertisements. The Visayan bids, which were those for Cebu, 
Negros, and Panay, required a guaranty—such a guaranty as the 
act of Congress authorized, which was 4 per cent upon the first- 
mortgage bonds that should be issued and sold at not less than par, 
the whole proceeds of which should be devoted to the construction 
and equipment of the roads, the sums that might be paid by the 
Government under the guaranty to constitute a lien charge upon 
the {property of the road, in the nature of a mortgage, and to be con¬ 
tinued for a period of not more than thirty years. 

THE VISAYAN SYNDICATE. 

The tenders of the Visayan syndicate, as I might call them for 
brevity, were accepted, and an act was passed authorizing the governor- 
general to execute a concession to the Visayan syndicate. That syn¬ 
dicate transferred its rights to a corporation formed, I think, under 
the laws of New Jersey, and the concession was executed by the 
governor-general about the 1st of July, 1906—actually on the 10th 
day of July. It requires the railroad company to complete its sur¬ 
veys within six months and to complete 100 miles of the road within 
twelve months after the completion and approval of the surveys. 
Immediate notice was given to them to commence their surveys. The 
surveys should be practically finished by this time. They practically 
have been finished. A force of surveyors was brought over in the 
spring, and the Visayan roads have been surveyed. The engineers 
advertised for ties throughout the Philippine Islands, and they have 
made their contracts for iron and other supplies. 

In the month of November Governor-General Smith, who was in 
the southern islands at that time, opened the work in Cebu by throw¬ 
ing the first shovelful of dirt, so that those three southern railroads, 
aggregating 295 miles, are now in actual process of construction. The 
roads have been established and the work is going on. The other 
concession which was made in the island of Luzon had relation also 
to the existing system of the Manila and Dagupan Railway. The 
first tender was for another road that should proceed north from 
Dagupan, their present northern terminus, to the northern end of 
the island of Luzon. It required a guaranty upon that portion of 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 303 

the road. The other portion of the road tendered for, being through 
the more thickly settled portions of Batangas and Cavite, Tayabas, 
and Ambos Camarines and Albay, was such that no guaranty was 
necessary. The road will probably be profitable from the outset. 

It was the opinion of the Commission that it was better for the 
islands not to burden themselves with guaranties any further than 
was indispensably necessary. The syndicate making a tender for 
roads in Luzon was willing to construct all the roads involved in its 
tender except the road from San Fernando north without a guar¬ 
anty. That would give them about 30 miles farther north than they 
now go, terminating at San Fernando, in the province of La Union, 
and in the nature of things the demands of commerce would be such 
that they would ultimately build extensions farther north as a feeder 
to their main lines and to supply those regions. The award was made 
on the basis that they should not be required to build from San Fer¬ 
nando north, but that they should build the other lines without any 
guaranty. Their tender, however, contained certain conditions that 
the Commission deemed unwise to incorporate in legislation. Trust¬ 
ing to memory, I will say that one of them was that no compet¬ 
ing lines should ever be authorized. Another one was that the pres¬ 
ent quite high rates of the Manila and Dagupan Railroad for trans¬ 
portation or freight and passengers should be permanent and be 
applicable to the new lines also. 

RAILROADS WITHOUT GUARANTY. 

The Chairman. Governor, will you please indicate on the map that 
part of the islands where the roads will be built without a guaranty. 

Governor Ide. Yes, sir. The present road runs from Manila to 
Dagupan, and the line that is now to be built goes to San Fernando, 
the capital of the province of La Union. The original tender re¬ 
quested them to go to the capital of Ilocos Norte, so that the road 
built now will extend from Dagupan to San Fernando. And they 
also are to build a branch that goes to the province of Benguet. This 
line to Benguet is also to be built without a guaranty. There is also 
a line from Manila that goes south, covering a portion of Cavite, 
and through the province of Batangas and down to Lucena, the capi¬ 
tal of the province of Tayabas. 

Another portion that is not now to be constructed is through the 
portion of Tayabas through mountains down through the Camarines. 
The number of inhabitants in this region is very small. A road 
would be very expensive of construction, and the earnings of the line 
would not be large. In the Camarines a road starts upon the west 
coast and goes to the capital, and then comes down through the 
Camarines and down through the province of Albay up to Bataan, 
where the United States Government has purchased coal mines. 
Communication from the province of Albay to Manila will not be by 
rail, but by steamer, water transportation being compartively cheap, 
and the construction expense through the mountains being such that 
at present it is not warranted. Those are the lines that are to be 
built without a guaranty. They are 430 miles in length, and the 
contract has been made through the Speyer syndicate, as it is called, 
and that syndicate has secured control of the existing Manila and 
Dagupan Railroad, and it has branches, so that all of the railroads 


304 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

in the island of Luzon will be under one management, and by the 
terms of the franchise and of the agreement which has been made the 
old charter of tfye Manila and Dagupan Railway is abrogated and 
the existing railroads come under the new charter, so that there is 
but one system governing the roads in Luzon. 

THE SPEYER PROPOSAL. 

I mentioned some of the difficult conditions in the Speyer pro¬ 
posal. If they were to eliminate the right of the government to 
establish competing lines, and also make permanent the existing high 
rates, the government would be bound for all time, as the concession 
is a permanent one, so that it would be practically in the hands of 
that corporation, and the Commission did not think that that was an 
advisable thing to do. It would be better for us to go without rail¬ 
roads than to tie our hands in the future. Negotiations were entered 
into that resulted in modifications of the tender. As it was left, the 
government has a right to regulate tariffs freely, subject, of course, 
to the same regulations and rules that apply everywhere—that they 
can not confiscate property. And there is no restriction upon the 
right of the government to grant franchises for competing parallel 
lines, so that in that respect the public is undoubtedly well protected. 

Another provision that the Speyer syndicate insisted upon was 
that the low rate of taxation that has been placed upon this property 
and upon their earnings should be perpetual. That was not deemed 
advisable, and in the end a rate of one-half of 1 per cent per hun¬ 
dred upon gross earnings was imposed as a tax for thirty years, 1J 
per cent for the succeeding fifty years, and after that time the rate 
of taxation was to be fixed by the government of the Philippine 
Islands. It should be remembered, also, that the act of Congress pro¬ 
vides that every charter that is granted by the Philippine government 
shall be subject to modification or repeal or change by the Congress 
of the United States, so that it is all in the hands of Congress. Even 
if we had not made the special provision as to regulating the rates, 
and as to parallel lines and other matters, the Congress has abso¬ 
lute control over these things, and in the franchises that are thus 
granted, the provisions of the act of Congress are specifically re¬ 
ferred to and made a part of the grants, which undoubtedly would 
not be necessary, as the Commission must necessarily legislate under 
the authority given by the act of Congress. This franchise was ap¬ 
proved by the Commission about the 1st of July, and the conces¬ 
sion was executed by the governor-general. This franchise differs 
from the other one in some respects. It has ho guaranty. 

The Chairman. Where will that go into effect? Where is that 
located ? 

THE SPEYER SYNDICATE FRANCHISE. 

Governor Ide. This applies to the whole of the Speyer syndicate 
franchise, coming down from San Fernando, through* Dagupan to 
Manila, from Manila down to Cavite and Batangas and Tayabas, 
with branches in the Province of La Laguna and elsewhere, and 
through the Camarines down through Albay. As I said, it differs 
from the Visayan concession in that there is no guaranty and in that 
it absorbs the existing railroad system intoi the new one; and, like¬ 
wise, in that instead of having six months for completing its surveys. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 305 

it has twelve months. But it agrees to build 150 miles within two 
years and 75 miles per year after that, at least. As a matter of fact, 
however, the work of making the survej^s is already underway, and 
was before the matter was finally consummated and brought into 
formal conditions. And the local manager, Mr. Higgins, who is the 
manager of the Manila and Dagupan Railroad [the existing road], 
and who has, in accordance with the law, been made the agent in the 
islands upon whom processes may be served and upon whom notices 
may be served, had agreed before I came away, so far as he had power 
to make an agreement, that that portion of the road that goes from 
Dagupan up to the province of Benguet should be finished in time 
for the coming hot season [April and May], and the whole work is 
moving on. 

But that syndicate is represented in the islands by Mr. Higgins, 
and he has had very long experience there, and he was much more 
shy of binding himself to complete the work within a comparatively 
short time—a certain number of miles—than the other syndicate was, 
which is composed of and managed by Americans who have had less 
experience with the difficulties of fulfilling contracts rigidly in trop¬ 
ical countries where great difficulties are experienced from torrential 
downpours of tropical rain, and also from the uncertainty of obtain¬ 
ing skilled labor. But still they were all very confident when I 
came away that the liberal time that had been given to the Speyer 
syndicate was given out of abundant caution on their part and that 
the road would be built very much earlier than the time specified. 
These concessions have been accepted by the syndicates and the work 
actively entered upon, so that we can see now very plainly that it is 
a mere question of only two or three years before we will have a very 
large extension of our railway system. 

VISAYAN RAILROADS. 

The Chairman. You spoke of the VisayanTslands, Leyte, Negros, 
and others. Will you please point those out on the map to the com¬ 
mittee ? 

Governor Ide. This is Panay [indicating], this is Negros, this is 
Cebu, this is Bohol, and this Leyte, and this is Samar. 

The Chairman. Where will the roads run in those islands? 

Governor Ide. The road in the island of Panay runs 95 miles from 
the city of Iloilo along through the island and through the province 
of Capiz to its capital, Capiz, and on to Batan, a little beyond on 
the north side of the island. The line on the island of Negros runs 
108 miles from Escalante, where there is a harbor in the northeast 
portion of the island, across the island, coming down to San Juan 
de Ilog, where sugar plantations are largely located. There is no 
harbor here, and this road will enable their sugar to be taken across 
to the harbor at Escalante. The road in the island of Cebu runs 
60 miles from Danao along the coast quite a distance down to Argao, 
wfith the right to build twenty more across the island. 

EFFECT OF CONSTRUCTION OF RAILROADS. 

The Chairman. What effect upon the people has the surveying 
for those railroads had in the islands? How do the people receive 
the news of the proposed construction ? 

35815—08-20 


306 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Governor Ide. Remarkably well. The island of Cebu has perhaps 
been in as unsatisfactory a condition industrially as have any of the 
islands for a year or two, for several reasons. It is not a very large 
island. It has over 600,000 people. It has an excessive population 
for an island of that size, and the unwise policy was pursued many 
years ago of burning off the trees and tall grass from the forests and 
hillsides for the purpose of cultivation, and they have gone on burn¬ 
ing until the hills have been denuded and the rainfall runs rapidly 
away, and for that reason droughts are liable to occur. If the rain 
is not fairly well distributed throughout the year droughts will occur. 
When the Taft party, of which several members of this committee 
were members, visited Cebu they undoubtedly noticed that the condi¬ 
tions industrially were unsatisfactory there. The people were poor, 
but it is almost impossible to induce them to go away to live. The 
Filipino does not like to leave his home. He is not venturesome like 
the American people, but a great many of the inhabitants were in¬ 
duced last year to leave the island of Cebu and go over to Leyte and 
assist in harvesting and planting. 

Mr. Fuller. What are the dimensions of that island? 

Governor Ide. I can not state offhand, now. 

But as soon as the rains came nearly all of these people that had 
left Cebu and gone to Leyte came back where their families and rela¬ 
tives were. It is very difficult to get the very dense population to 
move from the region where it is not needed to another region where 
it would be most useful. When the railroads were being surveyed 
and opened, the people of Cebu—I mention that because of the par¬ 
ticular industrial conditions there—have manifested pleasure and 
satisfaction. 

The Chairman. How large is the city of Cebu ? 

Governor Ide. The city of Cebu has about 40,000 inhabitants. The 
people there saw that the building of the railroad was going to open 
up their country more or less, and would furnish means of transporta¬ 
tion, which at present are very poor very largely by reason of the 
death of their draft animals from rinderpest and also because a 
large amount of money would be distributed in the employment of 
labor and in the purchase of local supplies that would be raised in the 
vicinity, and the governor of Cebu and the municipal officials have all 
taken an active interest in the railroads, and are looking forward to 
great material benefits, which they will, undoubtedly, sooner or later 
get. Very little difficulty was experienced in getting the cooperation 
of the people in that enterprise. 

PHILIPPINE AGRICULTURAL BANK. 

The Chairman. We will now leave the subject of the railroads 
and hear you briefly on the proposed agricultural bank. We will call 
on you later for a more elaborate discussion of it. 

What do you think of the proposed agricultural bank, its advis¬ 
ability, etc. ? What are the great needs of the islands, etc. ? 

Governor Ide. The needs are tremendous. There can be no ques¬ 
tion about that. We have practically 8,000,000 people, more or less, 
in the islands. The money consists of our Philippine currency, of 
which, speaking in round numbers, f*34,000,000 have been coined. 
The old currency, the Mexican and Spanish-Filipino, has been driven 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 307 

out of the islands, and when I say that it has been driven out I mean 
that there is none in circulation. You see none of it anywhere. 
Business is all done in the Philippine currency. There is a Spanish- 
Filipino bank which by the terms of its Spanish charter has power 
to issue bank notes for three times the amount of its paid-up capital, 
but the Commission has so legislated by way of heavy taxation upon 
any paper money that may be issued in excess of the paid-up capital 
that it is practically impossible for the bank to issue paper money 
in excess of the amount of its paid-up capital. That question, I 
suppose, may come before this committee. The bank insists that we 
have robbed them of a most valuable right, and, of course, the right 
to issue paper money to three times the amount of their capital is a 
valuable one. As the matter stands now they can issue paper money 
only to the amount of their paid-up capital, which is a million and a 
half pesos. The only money in circulation now issued under the 
authority of the Government is the 1*34,000,000 of our new money 
and a million and a half of the paper money of the Spanish-Filipino 
Bank. 

The Chairman. The 34,000,000 would be equivalent to 17,000,000 
in gold. 

CURRENCY USED IN THE PHILIPPINES. 

Governor Ide. Yes, sir. We are doing business on a gold standard 
entirely. There is a certain amount of United States currency in 
the islands. Very little of it, however, is used in the ordinary busi¬ 
ness of the islands. Banks keep a considerable portion of it on hand 
because it is useful for shipment abroad. Our Filipino currency is 
not intended to be shipped abroad. If a man desires to make a ship¬ 
ment abroad he comes to our treasurer with Filipino paper money, 
and we give him United States money without charge, making the 
exchange on a basis of two to one, maintaining the parity of our 
coins in that way and by sales of drafts on New York. The insular 
treasury also has a certain amount of United States money. The 
quartermasters make their payments mainly in local currency, in the 
Filipino currency. 

The paymasters in the Army also use the Filipino money very 
largely, and it is also used quite extensively in the Navy, because the 
people who spend money there like to have money that is known 
there. It is the money of the country. So that you can see that for 
7,000,000 or 8,000,000 people the amount of currency in the islands 
is very small indeed, and that is the amount of money that is there. 
There" are other banks, but they have no authority by law to issue 
paper money. The Spanish-Filipino Bank claims a monopoly, ex¬ 
isting for a "certain number of years, in that respect, under a charter 
granted by the Spanish Government. The existing laws are liberal 
enough. The Spanish law allowed loans on real estate, and the es¬ 
tablishment of mortgage banks. I have made a very careful ex¬ 
amination of the law, and I am satisfied that there is nothing in the 
way of existing law that prohibits the establishment of a mortgage 
bank by private capital. We have had all these years to test the proba¬ 
bility of private capital occupying the field. A private bank can not 
be established on the cooperative plan, because the people have not 
the money to put into it. Nor can the government establish out of 
its own funds an agricultural bank, because it has not sufficient 


308 HEARINGS BEFOBE COMMITTEE ON INSULAE AFFAIBS. 


money to do it. It is entirely impracticable. Nor can private capi¬ 
tal of residents of the islands meet this need. They have not the 
requisite revenues, nor has private enterprise from abroad been will¬ 
ing to come into the field. 

I have been very conservative on the subject of an agricultural 
bank. Banks would not come in because their charters did not allow 
them, with the exception of the Spanish-Filipino Bank, to issue loans 
upon real estate. But, as you can see, its capacity is comparatively 
small, and the titles to real estate were so uncertain that I could not 
see my way clear to recommend the government to go into that busi¬ 
ness, even if it had the money, and the same conditions applied that 
applied to private banks. But conditions have changed very materi¬ 
ally in certain respects. In the first place, the establishment of the 
Torrens system of land registration gives a method of securing an 
absolute title which can not be assailed and is substantially like a cer¬ 
tificate of shares in a bank or railway, and its transfer is made in the 
same way, by surrendering the certificate and the issuing of a new 
one, and the title is unassailable. So that it would be entirely possible 
for a bank organized with suitable restrictions to run no risks what¬ 
ever on its titles—its real estate titles. In the next place- 

REGISTRATION OF LAND TITLES. 

Mr. Parsons. How extensively has the Torrens system been 
adopted in the islands? 

Governor Ide. I can not give you at this moment the full statistics 
as to this. But 2,467 applications had been filed down to June -30, 
1906, of which 814 had been filed within the last ten months, or an 
average of 81 per month. The value of the land covered by these last 
814 applications amounted to nearly T10,000,000. The Torrens sys¬ 
tem has, in my opinion, made more rapid progress in the Philippine 
Islands than anywhere else that it has ever been adopted in the same 
length of time. 

Mr. Crttmpacker. Was there any system of registration before you 
adopted the Torrens system? 

Governor Ide. There was a system, but it was adopted only com¬ 
paratively recently, and the war came about before a very large 
number of titles had been registered and a great portion of the orig¬ 
inal deeds, as well as the few records, were burned in the war. A 
great many of the titles stood upon occupancy or possession, or upon 
imperfect Spanish grants, and a great many records of those that 
had been recorded were burned. The titles secured under that sys¬ 
tem were assailable. Under the present system they are unassailable; 
and I might remark, in that connection, that some of the single 
claims that have been presented before the court of land registration, 
while appearing as single claims, involve a thousand or two thousand 
claims; that is, a large alleged landowner submits his claim and the 
occupants are cited to appear and defend their rights, or show that 
the land is theirs. They claim it on the ground that they and their 
ancestors have occupied it from time immemorial; but it usually 
turns out that they have occupied it simply as tenants and paid rent 
for it until the disturbance arose. 

The first point, then, is that our titles are such now that a bank 
«an loan money upon real estate titles that are absolutely certain—- 



HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 309 

more certain than in most of the States of the Union, as far as the 
titles are concerned. 

• T1 j*L next P ro P os iti° n that has had a very strong effect upon my 
mmd has been that they have had a system in Egypt that has worked 
out extremely satisfactorily and effectively where the conditions, 
while m some respects different from those in the Philippines, were 
m many particulars similar. Under that system capital is furnished 
by private individuals, who established an agricultural bank. The 
gcwernment I am only very briefly stating it, from memory, and 
Doctor Jenks and Doctor Kemmerer will give you much more full 
information if you care for it on that subject—the government, by 
stringent law, prohibits all loaning b} r the bank except on Torrens 
titles, and prescribes the interest that may be charged to the debtor. 

INTEREST RATES IN THE PHILIPPINES. 

The Chairman. At that point I want to ask what is the rate of 
interest in the Philippines to-day; how does it run? 

Governor Ide. It varies very much indeed. The agriculturists, 
whom w r e hope this bank would benefit more than anyone else, pay 
preposterous rates of interest—20, 30, or 40 per cent per year or more, 
and sometimes as high as 100 per cent. But they pay in another way 
also, and suffer more still. The usurer requires as his security that 
the crops shall be sold to him, the prices to be fixed by him.. He 
might probably under the administration of our courts—if he were 
the man who has authority to fix the prices—be required to be a just 
judge, and not to decide in his own favor arbitrarily and unreason¬ 
ably, but the debtor is not able to go into court, and he knoAvs no 
principle of law of that kind, and the effect is that the real rate of 
interest is more than 100 per cent in a great many cases and, of 
course, this keeps the debtor under the harroAv all the time. 

AGRICULTURAL BANK OF EGYPT. 

Under the system of the Agricultural Bank of Egypt the capital 
is furnished by private individuals, and the management of the 
bank is conducted very largely under governmental supervision. 
The collections are made by government officials—tax collectors. A 
rate of interest is guaranteed to the capitalists who furnish the 
money, of 3 per cent or 4 per cent, and the difference betAveen that 
and the rate at Avhich the money may be loaned—8, 9, or 10 per cent— 
is sufficient to pay all the expenses, and the losses, if any—and not 
merely the rate that the government guaranteed, but likeAvise a 
considerable additional rate—so that it forms an attractive induce¬ 
ment for investors. That is, they are sure of \ reasonable return, 
and have the opportunity, if good management is exercised, of se¬ 
curing a considerably larger return. 

Now, while the banks have been unwilling, as I say, to make ad¬ 
vance on real estate in the Philippine Islands, they have also mainly 
been prohibited by their charters from so doing or by the regulations 
from their home officers. Yet the manager of one of the large banks 
has offered to procure the necessary capital for an agricultural bank 
with a gOA^ernment guaranty, something like that Avhich Ave make in 
the case of the railroads. 


310 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


FINANCIAL CONDITION OF THE PHILIPPINE GOVERNMENT. 

I am prepared to make a showing as to whether the government 
can sustain such a guaranty as that under such a bill as is proposed 
here, if it is desired to go into that subject now. 

The Chairman. I wish that you would give the financial condition 
of the treasury now, and the maximum burden that would be imposed 
on the treasury in the event of it having to pay the full guaranty. 

Governor Ide. Well, speaking in round numbers, the government 
finished the fiscal year ended June 30, 1906, with all obligations met, 
including the interest on bonds, and every other obligation; stood even 
on that day with practically $1,300,000 gold to the good in the treas¬ 
ury. The budget for the fiscal year 1907 has been made upon the basis 
that the income would be substantially what it was last year. Last 
year the custom’s receipt fell off very materially, for reasons that I 
could explain if necessary here, but which do not affect the general 
situation except favorably, and it is estimated that the customs re¬ 
ceipts may fall off to some extent this year, but the internal-revenue 
law is constantly producing larger and larger returns, so that I think 
that there is no doubt whatever that if there should be any decrease in 
the customs receipts the increase in the internal-revenue receipts 
would make up for this. 

It would be a very conservative statement to say that the entire re¬ 
ceipts for the coming year will be as large as they were last year. On 
the other hand, the expenses have been very materially reduced, and 
the estimate of expenses is made by taking the actual appropriation 
bills that have been passed—passed substantially before I came away. 
The insular appropriation bills had been passed, and the appropria¬ 
tion bill for the city of Manila was well under way and has since been 
passed. The result of that budget—and this is a conservative state¬ 
ment; there is no question about that at all—is that there will be at 
the end of the year a surplus of 5^2,932,000—that is, approximately 
$1,500,000 gold—from the operations of the year, and I am not in¬ 
cluding in that the present surplus that we have. So that there 
would be at the end of the year a surplus of nearly $3,000,000 gold, 
practically, provided we continued to construct our public works out 
of the bond issue that Congress has authorized. My recommendation, 
which is embraced in my report as secretary of finance and justice, is 
that we keep in reserve a permanent fund of substantially $2,000,000 
gold to meet contingencies and emergencies like any great pestilence, 
or any great loss of crops, or any other great misfortune that may 
come, and also to make sure of meeting the guaranty on the Visayan 
railroads. So that the government will maintain itself this year 
out of its revenues, and will have a million and a half dollars gold 
to the good, besides a million three hundred thousand dollars that it 
has to the good now. 

Now, if the Visayan roads were to be built at a cost of $40,000 
gold per mile, including equipment, which is the estimate of the 
engineers of the roads, but which is more than the government ex¬ 
pert, Mr. Monitor, estimates, and the government had to pay the 
whole guaranty of 4 per cent on that cost of 295 or 300 miles—you 
will observe that I am taking the outside limit in every case—it 
would pay $480,000 gold per year. In the first place, it will be sev- 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 311 

eral years before the whole of the road will be in operation, and there- 
tore before the whole of the guaranty would be required. It is not 
called for except as far as the road is built. There will probably be 
no call at all during this coming year. In the second place, Mr. 
kTA*’ our . ex P ep t; who has made a very careful investigation, feels 
that the earnings of those lines will be such that they never will call 
on the government for the guaranty. But assuming the worst phase 
of the situation, with 300 miles built at $40,000 a mile, and the earn- 
We wou ^ have to pay the whole guaranty, amounting 
to $480,000, you can see very well that with the million and a half 
surplus per year we could live very well indeed, and also could, if the 
necessity arose, expend a considerable sum as a guaranty upon an 
agricultural bank. My opinion is that if the agricultural bank is 
properly managed and there are, of course, losses common to every¬ 
thing—we will never be obliged to make good the guaranty. There 
is also to be considered the profits of $6,000,000 or more that will 
accrue to the insular treasury from the recoinage of the Philippine 
currency recently authorized. 

SUCCESS OF AGRICULTURAL BANK OF EGYPT. 

The Chairman. It is true, is it not, that the government of Egypt 
has never had to contribute a dollar toward its agricultural bank ? 

Governor Ide. That is as I understand it. 

The Chairman. Not from the very beginning? 

Governor Ide. I understand that they have never been obliged to 
contribute from their guaranty, and that the excess earnings in opera¬ 
tion have been sufficient to warrant most satisfactory dividends to 
stockholders, and that there have been practically no losses. Mr. 
Kemmerer can state that more fully. That is my understanding. 

OPERATION OF PROPOSED PHILIPPINE AGRICULTURAL BANK. 

Mr. Crumpacker. What is your idea as to distributing money to 
the people in the other parts of the islands by local exchanges or 
branch banks? I understand that some of the people conduct their 
enterprises on a very small scale. If they proposed to borrow f*50, 
fM00, or P200, would they have to go to Manila to the bank, or 
would agents of the bank have to go out and examine the property 
on which the money was proposed to be loaned ? This would be very 
expensive, unless you had some system of carrying the facilities out 
to the various communities throughout the archipelago. 

Governor Ide. There is a first draft of a law covering the details 
of the organization, in which all those contingencies are provided 
for. The inspections are made by local governrhental and bank au¬ 
thorities op the spot. The governmental agents $re people who 
are engaged in the employment of the government, and as the govern¬ 
ment stands back of the guaranty it has the right to have a voice in 
deciding as to whether a loan shall be made or not. 

Mr. Crumpacker. Then applications for loans can be made in the 
several communities? 

Governor Ide. Applications can be made to local agents. They 
will be reported to Manila. The direct administration must be local, 
in order to be satisfactory. If this bank performs the function that 


312 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

we want it to perform, it will help the small owner; he is the man 
who needs the help. 

Mr. Parsons. When you say “ small owner” what do you mean? 
Owning how many acres ? 

Governor Ide. t mean the man who owns comparatively few hec¬ 
tares. A hectare is about 2-J acres. The producers who do not need 
the help would undoubtedly absorb the capital of any bank if they 
could get it. 

Mr. Crumpacker. They are the larger operators, who can be accom¬ 
modated under existing conditions without great extortion ? 

Governor Ide. The existing conditions are such that the banks will 
not lend on real estate, excepting the Spanish-Filipino Bank, and its 
capital is only one million and a half. 

Mr. Fuller. Why have such extortionate rates of interest been 
permitted ? 

Governor Ide. You have this alternative: Shall a man be able to 
get money by paying extortionate rates, or shall he be unable to get 
it at all ? 

Mr. Garrett. As a matter of contract—a contract agreement. 

Mr. Rucker. There is no criminal statute down there against usury, 
is there ? 

Governor Ide. No. 

Mr. Rucker. I think that that is one of the best things to do first. 
You think that the capitalists and the money buyers are on a 25 per 
cent basis. 

Mr. Fuller. This proposed system, you think, will do away with 
that, and give money to a man at a reasonable rate of interest. 

NEED or PROPOSED BANK. 

Governor Ide. It is just what they need. It is just what we want 
# to see done. I am entirely free to say that everything depends upon 
the conservatism of the management. If it is managed sufficiently 
carefully, sufficiently conservatively, I think that it will be a tre¬ 
mendous boon to the people of the islands, and that the losses may 
be made very small, and perhaps I might say, probably none. My 
figures here have been effective in demonstrating that if we have to 
pay for all the guaranty that is contemplated here, and also the full 
guaranty on the railroads, we would still be able to do it; and every¬ 
body knows that the increased prosperity of the islands, the increased 
means of transportation, the increased production that will come, 
enabling the agriculturists to get money, means an increase of busi¬ 
ness. It means an increase of internal-revenue income, so that we 
should constantly be becoming in better and better condition to take 
care of these obligations, provided we have to meet them. 

SOURCE OF PHILIPPINE REVENUES. 

Mr. Crumpacker. Your revenues are chiefly customs and excise 
taxes, are they not. 

Governor Ide. Yes; they are the principal source of revenue for 
the insular government. The ice plant, which is a government insti¬ 
tution, gives to us practically $200,000 gold net income every year 
above all expenses of operation. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 313 

Mr. Crumpacker. Have you any ad valorem land tax? 

Governor Ide. Yes; but not for insular purposes. The land tax is 
a burden. It is a kind of tax that is entirely new in the islands. It 
was introduced by the Philippine Commission, and, of course, is not 
popular with those who have before escaped the burden of it. It is 
more popular, undoubtedly, than it otherwise would be by reason of 
the provision that the wdiole of it is to be expended locally in the 
place where it is raised. It all goes to the respective provinces and 
municipalities. 

PHILIPPINE INTERNAL-REVENUE LAW. 

Mr. Parsons. Has the agitation against the internal-revenue tax 
ceased ? 

Governor Ide. Substantially, yes. The internal-revenue law has 
proven to be a wise measure, and is indispensable for our revenues. 
It does away with many other taxes. Before it went into effect the 
little shopkeeper and driver of carabao, and the little dealers of 
every kind, were taxed on substantially everything they did. There 
was a great multiplication of such taxes, but now the burden is placed 
largely on alcoholic liquors and tobacco products, and this tax has 
become a very large source of revenue. The opposition to the in¬ 
ternal-revenue law came mainly from the liquor and tobacco dealers 
and manufacturers. In view of the fact, however, that the cigar and 
cigarette business of the islands is as large as it was before the passage 
of the law in question, the tobacco men are becoming somewhat recon¬ 
ciled to the changed conditions. They collect the tax from the per¬ 
sons to whom they sell their goods by adding to the price the amount 
of the tax. The liquor industry has suffered somewhat. There has 
been some diminution of the consumption of alcoholic liquors. The 
liquor dealers are principally responsible for this, because they were 
so opposed to the law that they added three or four times the amount 
of the tax to the price of their commodities, so that it diminished 
their sales. This has been the principal agitation against the law. 
The law has settled the problem of our fiscal system for the present. 

LAND INHERITANCE. 

Mr. Garrett. As to the laws of inheritance, where does the land 
descend ? 

Governor Ide. It descends directly in the line of the family and 
belongs to the family and the descendants. 

Mr. Garrett. Is there much making of wills there ? 

Governor Ide. Yes, sir. There is more or le^s making of wills, 
just about as there is in other countries. 

ABILITY OF PHILIPPINE GOVERNMENT TO MEET ITS OBLIGATIONS. 


The purpose of my making a statement as to our financial condi¬ 
tion was to show that if we should have the worst contingency possi¬ 
ble—that is, if we should have to pay the whole of such sum as may be 
agreed upon as the extent of the liability of the government—that we 
would still be able to finance it perfectly well and even then have a 
considerable surplus left. But, on the other hand, it is to be remem- 


314 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

bered that if this proposed bank is properly conducted, it is not 
going to lend any very large sums at the outset. It is going 
to take certain regions tentatively, just as was done in Egypt, and 
then extend its business gradually as it sees it can safely do so. It 
will exercise the utmost caution and care and pay the money where 
it will come back again. 

The Chairman. I think, Governor, that we will suspend your 
hearing at this point. 

Mr. Rucker. Pardon me, I would like to ask one question before 
the governor concludes. What amount of capital do you recommend 
for that bank? 

Governor Ide. I think that the bank ought ultimately to have a 
capital of $10,000,000. 

SCOPE OF PROPOSED BANK. 

Mr. Rucker. There would be only one bank in the entire archi¬ 
pelago ? 

Governor Ide. There would be only one bank, but this bank would 
be so organized that it would reach over every part of the archipelago. 

Mr. Rucker. So as to have authorities in any part of the islands? 

Governor Ide. The authority that you are to give will be put in 
the hands of the Philippine Commission to attend to the details of 
such legislation. 

Mr. Rucker. Is it your idea that the bank as authorized would be 
given power to loan money in all parts of the islands? 

Governor Ide. Yes; as to this I have no doubt. 

Mr. Rucker. Now, as to the value of the property given as secur¬ 
ity ; by whom will that be determined ? 

Governor Ide. That will probably be determined by the agent of the 
bank, aided by the treasurer of the province, who is an American, and 
by certain municipal officers living in the town in which land is 
located. 

Mr. Rucker. Would not much of this land be very remote from the 
town where the treasurer of the province resided ? 

Governor Ide. Yes, sir. 

INVESTIGATION OF SECURITY. 

Mr. Rucker. Would he have to go and inspect the land personally ? 

Governor Ide. Not necessarily. He has in his office a record of 
the valuation of every single piece of property, for the purpose of 
taxation, and he would know the valuation that has been made this 
year for that purpose. He has that to start with. He knows the 
land, and he would be able through the proper machinery, I suppose, 
to secure a sufficient inspection of it. 

Mr. Rucker. Bv whom is the land valued for taxes? 

Governor Ide. It is valued, in the first place, by the municipal 
authorities, by a municipal board that is appointed for that purpose, 
which is composed of Filipinos in practically every case, and they 
know a great deal more about what the land is worth than any Amer¬ 
ican can know. The owner has a right to appeal to a provincial 
board, and then there is beyond that the right of appeal to the 
insular equalization board. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 315 

Mr. Rucker. As I understand it, if these officers charged with the 
duty of assessing see fit to assess high, and the local officers make the 
same sort of a recommendation, it is possible within one year’s time 
that a multiplicity of agents act on the proposition. Are the board 
of inspectors, the employees, and officers scattered throughout the en¬ 
tire group of islands to be paid out of the revenues of the bank? If 
so, they would have no desire whatever, because the government 
would- 

Governor Ide. In the first place, I would assume that no valuators 
for the bank are going to be bound at all by the valuation that is 
made for the purpose of taxation. That is simply a starting point. 
They would have that for getting a certain kind of estimate, and 
then they would make their own investigations. The bank has a 
margin of 6 per cent and a 4 per cent guaranty. Out of that total of 
10 per cent they can afford to pay their employees to be diligent in 
behalf of the bank and still have enough left to prevent the govern¬ 
ment guaranties from being called upon, and also to produce an 
additional income. 

EFFECT OF AGRICULTURAL BANK IN EGYPT. 

In Egypt the people were shiftless, thriftless, tremendously loaded 
down with debts, addicted to gambling, and wasted their substance 
until they were in the hands of the usurers. The result of the agri¬ 
cultural bank has been that the Government has made them prac¬ 
tically a new people. And it has now how many millions? 

Mr. Kemmerer. From $35,000,000 to $40,000,000. 

Governor Ide. From $35,000,000 to $40,000,000, and the margin 
between the government guaranty rates and the rates on which the 
loans are made is sufficient for efficient service and substantial profits. 

The Chairman. It has very greatly changed the character of the 
peasants, has it not? 

Governor Ide. Yes; it is said to have changed greatly the character 
of the peasants. 

MONEY LENDERS IN THE PHILIPPINE ISLANDS. 

Mr. Rucker. You say that the rate of interest charged by the usur¬ 
ers goes from 20 to 40 per cent and sometimes as high as 100 per cent. 
By whom are those loans made—by Americans or Filipinos? 

Governor Ide. Those are made quite largely by the big trading, ex¬ 
porting, and transporting companies. They w T ill furnish money for 
the purpose of keeping the producer along. 

Mr. Rucker. Are they controlled by the native, people or by Amer¬ 
icans ? 

Governor Ide. They are not Americans. Those large houses are 
mainly the old houses that were there during Spanish times. Very 
few of 5 them are controlled by Americans. 

PROBABILITY OF SUCCESS OF PROPOSED BANK. 

Mr. Rucker. Do you think that the resources of the islands and 
their possibilities are ample to justify the conclusion that the Govern¬ 
ment would not be called upon for any part of this guaranty ? 


316 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


Governor Ide. Yes, sir; I think so. 

Mr. Rucker. That being apparent to one who has studied the situa¬ 
tion there, what reason is there that private capital has not gone 
into that field? 

Governor Ide. There is a very great difference between private 
capital going in where there is no guaranty at all and no government 
machinery to help it and private capital going in where there is a 
certainty of 3 per cent or 4 per cent return and government agents 
engaged in procuring the necessary information and aiding in mak¬ 
ing collections. 

Mr. Rucker. What I am trying to get at is this: After studying 
the conditions there you are satisfied, as you seem to be, that the 
government would never be called upon for any part of that 4 per 
cent guaranty that is proposed. This being so, w T hy would not a 
man with capital be willing to make such an investment ? 

Governor Ide. That is it exactly. He is willing to make an invest¬ 
ment under those conditions, but an investment under those condi¬ 
tions is very different from the conditions where there is no guaranty 
of any kind whatever. And, again, a private individual would also 
have the expense of looking after his loans and securities. He would 
have to organize his machinery in order to make the loans and inspect 
the titles to the land. 

Mr. Rucker. I can not see the difference, where a man has the 
capital for the purpose and knows that it will pay at least 4 per cent. 

Governor Ide. Perhaps I could illustrate in another way. I think 
that probably this committee—although I do not know certainly— 
recommended the guaranty on the railroads in the Philippines. Now, 
the same argument that is now suggested would have prohibited the 
granting of any guaranty upon the railroads in the islands, because 
private capital would see that they would get sure returns, but they 
did not come in and invest until they understood that the government 
guaranty was established. Instead of being started first on a large 
scale, the Egyptian Agricultural Bank was started on the small 
capital of £10,000 Egyptian, which was gradually increased by the 
government, and then the whole was passed over to the Bank of 
Egypt, and then passed over to the bank especially organized for that 
purpose. The money did not come in before except through local 
usurers, but with the government guaranty it flowed freely into the 
bank. Each year sees more and more money being put in. Now, 
whether private capitalists ought to see their way clear to going in 
there is for every man to judge for himself. As for myself, if I had 
the money I Avould not put it into a private, individual enterprise 
with no governmental machinery organized to assist me. On the 
contrary, I would feel that it was a very unsafe thing for me to make 
such an investment except under the scheme proposed here. The rail¬ 
road men who asked for a guaranty stated that, while they did not 
expect the government to be called upon at all to make the guaranty 
good, it would make a great difference in the selling price of their 
bonds. 

Mr. Rucker. That is a New Jersey syndicate, I believe. 

Governor Ide. No; it is two syndicates. 

Mr. Rucker. Organized in New T Jersey, I understood you to say. 

Governor Ide. One with a charter obtained under the laws of New 
Jersey, and one with a charter under the laws of West Virginia. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 317 

Mr. Rucker. I should rather think that they will call on the gov¬ 
ernment for the guaranty. 

w^? Vern0r ^ DE ‘ ^ ne ^ iem can n °f> because there is no guaranty. 
\\ e have a very good expert that supervises the construction in behalf 
of the government, and if we have to pay I think that it will be, 
perhaps, because we ought to. I think that it will not be for any 
other reason. But I am not a sufficient railway expert to give an 
opinion that would be of value, but Mr. Molitos, our expert, who is 
a practical railway man, and who has been ever since he was a boy, 
and who is a very competent man, is of the opinion that we will not 
have to pay a cent, and yet the Americans would not build a railroad 
m the Yisayan Islands without a guaranty. And it would affect the 
willingness of capitalists to put their money into an agricultural bank 
if they could depend upon their investments being sure of a 3 or 4 
per cent interest. 


NECESSITY OF ESTABLISHMENT OF AGRICULTURAL BANK. 

Mr. Rucker. This bank is deemed essential because of the condi¬ 
tion the agriculturists of the islands are in, and their condition, I un¬ 
derstand, is prett}^ bad. Is that right? 

Governor Ide. That is right. 

Mr. Rucker. Is their condition to-day worse than it was five years 
ago? 

Governor Ide. I do not think so. I think that it is better than it 
was five years ago. 


CONDITIONS IN THE PHILIPPINES. 

Mr. Rucker. You having had advanced opportunities for obser¬ 
vation and knowledge over there, the question I want to get at in 
a tangible way, for my own guidance, is whether the condition of 
these islands is better than, or worse than, it was five years ago. 

Governor Ide. I intended to say that, in my opinion, it is materially 
better now than then. 

Mr. Rucker. So that they seem to be making progress, and possibly 
will get along so well that they will soon be enjoying their prosperity 
thoroughly. 

Governor Ide. That depends upon what you call prosperity. I 
would differ a little from your inference. I would not say that they 
would soon be enjoying prosperity.' The people are too poor. In 
some provinces 95 per cent of their animals have been destroyed. I 
would not say that they would soon be prosperous. 

Mr. Rucker. But they have been gaining in prosperity ? 

Governor Ide. There is evidence that their conditions are slowly 
and gradually improving. With new facilities the means of obtain¬ 
ing money will accelerate that process very much. 

ADVISABILITY OF A USURY LAW. 

Mr. Rucker. Don’t you think that if you could get the Philippine 
government, or Congress, if proper, to pass an act to prevent usury 
that woul{l send some of these 10-percenters to the penitentiary that 
it would be a great help to the Filipinos? 


318 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


Governor Ide. I do not. I think that a usury law in the Philip¬ 
pines is at present most undesirable. The law regulates the rate of 
interest where no contract fixes it, but it is impossible to go among a 
people who are wretchedly poor and undertake to make them pros¬ 
perous by punishing men who have a little capital and who will let 
the people have it upon exorbitant rates and who control the prices 
of their products. 

Mr. Rucker. I can not see how people situated as those people are 
can be able to pay such enormous rates of interest and still prosper. 
I can not quite comprehend that. It would seem as though it were 
better to have those usurers put out of business. 

Governor Ide. I do not want to be understood as saying that every¬ 
body who is engaged in agriculture in the Philippine Islands is bor¬ 
rowing money and paying these high rates of interest. I mean that 
they could earn much more if they could purchase machinery and 
cattle and could employ more assistants. It is entirely impossible to 
apply to a country that is as poor as the Philippine Islands the same 
principles as can be applied to one that is abounding in wealth, as 
here in the United States, and if mistakes have been made in the Phil¬ 
ippines, as they undoubtedly have, it has come from trying to apply 
the same conditions there as would be profitable and useful here at 
home. 

Mr. Rucker. Have you any data that you can insert in your re¬ 
marks hereafter showing the percentage of landowners in the Phil¬ 
ippines that are free from mortgages? 

Governor Ide. There are no such statistics. 

Mr. Rucker. Are you prepared to give a rough estimate of what 
per cent of the landowners have mortgages? 

Governor Ide. I have not the slightest basis on which to make 
such an estimate. There are no statistics of this kind, as far as I 
know. 

OWNERSHIP OF PHILIPPINE LANDS. 

There is one fact in which you may be interested, perhaps. Every 
person who owns land is obliged to give his own valuation of his 
property in his statement for purposes of taxation. Last year there 
were oyer 2,000,000 of those applications or statements filed. Now, 
I mention that fact to show the distribution of the land and the very 
large number of landowners that there are there. There are 2,000,000 
applications out of a population of 8,000,000 people. Of course many 
persons have put in applications each for several, or in some cases 
many parcels, but at the same time the supposition that some people 
have had that the Filipinos are liable to be a landless people in their 
own country is not very well founded in fact. I suppose that a 
larger proportion of the Filipinos own their own land—that is, claim 
to own it, and have such titles that if they took the proper steps they 
would have them protected—than is true in the United States—a 
very much larger proportion. 

Mr. Rucker. I am obliged to you, Governor, for your replies to 
my inquiries. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 319 


STATEMENT OF EDWIN WALTER KEMMERER. 

S ie S HAIRMAN * ^ ease state your business or profession. 

Mr. K^mmerer. I am assistant professor of political economy in 
Cornell University. 

The Chairman. Have you visited the Philippine Islands? 

Mr. Kemmerer. I have. 

The Chairman. When? 

Mr Kemmerer. I was in the Philippines from August 1, 1903, 
to February 10, 1906. s 5 ’ 

The Chairman. In what capacity? 

Mr. Kemmerer. I went out there as adviser to the Philippine 
Commission in matters relating to the reform of the Philippine 
currency system, and that continued to be my work during those 
two and a half years. My official title after the passage of the 
Philippine gold standard act in October, 1903, was that of chief of 
the division of the currency. 

The Chairman. Have you visited Egypt? 

Mr. Kemmerer. I have. 

The Chairman. How recently ? 

Mr. Kemmerer. I was in Egypt in March of last year. 

The Chairman. In an official or representative capacity? 

Mr. Kemmerer. I was there as a representative of the Philippine 
government and of the Secretary of War as a special commissioner 
to Egypt to investigate the subject of the Agricultural Bank of 
Egypt. 

The Chairman. Who appointed you to go there for that purpose? 

Mr. Kemmerer. I was appointed by the Philippine Commission. 

Mr. Crumpacker. Was your appointment approved by Secretary 

Mr. Kemmerer. I believe it was. 

The Chairman. When did you go? 

Mr. Kemmerer. I left Manila on February 10, 1906, and arrived in 
Egypt about the middle of March, having stopped over in the Straits 
Settlements about two weeks for the purpose of studying the cur¬ 
rency reform then in progress there. 

The Chairman. Will you tell us what you saw concerning the 
workings of the Agricultural Bank of Egypt? 

agricultural bank or egypt. 

Mr. Kemmerer. I had been very much interested for some time in 
the Agricultural Bank of Egypt. Immediately after arriving in the 
Philippine Islands Secretary Taft, who was then the governor, asked 
me to make a report to the Philippine Commission on the subject of 
the advisability of establishing a government agriculture bank in the 
Philippines. I looked over somewhat in detail the experience of 
other countries with regard to agricultural banks and came to the con¬ 
clusion that the system employed in Egypt would be the best for the 
Philippines and the one most readily adaptable to conditions there. I 
sent for the reports of the Agricultural Bank of Egypt and its rules 
and regulations, and went over the subject with considerable care. 
In February, 1905, I made a report to the Philippine government. 


320 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

copies of which you have here, on “ The advisability of establishing 
a government agricultural bank in the Philippines.” 

In February of last year, when I was about to return to the United 
States, I was appointed by the Philippine Commission special com¬ 
missioner to Egypt. I arrived there in March and devoted two 
weeks to an investigation on the ground of the subject of land credit 
in Egypt. I had letters to the Earl of Cromer, and through him ob¬ 
tained letters to the manager of the National Bank of Egypt and to 
the manager of the Agricultural Bank of Egypt, as well as to a num¬ 
ber of Khedival advisers, business men, and other persons who were 
informed on the subject. Some of the persons I interviewed were 
bankers who were competitors of the Agricultural Bank of Egypt. 
I also went out into the field and visited one of the most important 
branches of the Agricultural Bank of Egypt. 

The results of my investigation are embodied in the report which 
you have here to-day on the “Agricultural Bank of Egypt,” and 
rather full details are given there. 

In my report on “ The advisability of establishing an agricul¬ 
tural bank in the Philippines ” there are a number of appendices, 
including all the reports of the Earl of Cromer up to that time, and 
in the report on the Agricultural Bank of Egypt these items are 
brought up to date. The annual reports of the bank are given, to¬ 
gether with the annual balance sheets and copies of the forms used 
in the negotiation of loans. The subject is a large one, and perhaps 
a word in regard to the development of the bank may seiwe as intro¬ 
ductory. 

THE NATIONAL BANK OF EGYPT. 

The Chairman. The National Bank of Egypt was a separate insti¬ 
tution from the Agricultural Bank of Egypt ? 

Mr. Ivemmerer. Yes; although the two institutions are closely 
related. The Earl of Cromer had for some time prior to 1894 been 
of the opinion that the small peasant landowners of Egypt were 
naturally much more thrifty and reliable than they had been given 
credit for. They had been charged extravagant "rates of interest 
on their petty loans; perhaps not such high rates as at present pre¬ 
vail in the Philippines, but, on the whole, very little lower—the 
rates running from 30 to 50 per cent. Furthermore, it was a common 
practice in Egypt, as it is at present in the Philippines, for the 
lender to compel the borrower to sell him his crops at prices fixed by 
the lender, prices which were often absurdly low. 

The Earl of Cromer finally urged the government to make an ex¬ 
periment in the line of government advances to agriculturists. Ac¬ 
cordingly in 1894 the government made certain sales of seeds to them. 
The prices theretofore charged the peasants for seeds had been enor¬ 
mous, and the quality of the seed bad, being inferior. The govern¬ 
ment sold a better grade of seed to the cultivators at lower prices than 
those prevailing in the market, with a provision that payment should 
be made in three or four installments after the crops were gathered. 
The amount of seed thus sold in 1894 was small, being only about 
27,000 bushels. The experiment was successful, and little difficulty 
was experienced in making collections. 

In 1895 the amount of seed thus sold was increased to about 44,000 
bushels, and in 1896 to over 46,000 bushels. In 1895 the Earl of 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 321 

Cromer suggested that the government try the experiment of advanc¬ 
ing money to some of these petty cultivators, and accordingly be¬ 
tween February and. July, 1896, advances were made to the sum of 
7,^00 pounds Egyptian, or $38,500. A pound Egyptian is $5 of our 
money. The advances were made for the crop season, and, with the 
exception of $100, the whole of the capital and interest was paid by 
the end of November. 

ORGANIZATION OF AGRICULTURAL BANK OF EGYPT. 

This success encouraged the Earl of Cromer to push the experi¬ 
ment still further, and so in 1898 the National Agricultural Bank of 
Egypt was organized. One of the main reasons Avhich induced the 
Earl of Cromer to favor the creation of this bank, as he person¬ 
ally told me, was the desire to provide an institution which would 
extend agricultural credit facilities among the peasants. That was 
the main reason for the establishment of the National Bank of Egypt, 
although the operations of the bank were by no means limited to 
agricultural loans. The bank started with a comparatively small 
capitalization, and limited its agricultural loans at first to one dis¬ 
trict of Egypt. During the spring and summer of 1899 the bank 
made 1,580 advances to peasants, amounting in all to about $24,000, 
and every cent of the money due in the year was collected by the 
government tax collectors. The bank’s agricultural loans extended 
so rapidly and were so successful that on June 1, 1902, the Agricul¬ 
tural Bank of Egypt was organized to take over the agricultural 
loans of the National Bank of Egypt. 

The Agricultural Bank of Egypt started with an authorized capi¬ 
tal of $12,500,000 and a paid-up capital of $6,250,000. The capital 
was increased until at the present time it amounts to over $50,000,000, 
inclusive of debentures. This phenomenal growth in the short period 
of a little over three years is strong evidence of the financial success 
of the bank. 

BENEFICIAL EFFECTS OF EGYPTIAN BANK. 

One of the great benefits which the bank conferred upon the peas¬ 
ants was the driving out of many usurers who had been, exacting 
exorbitant rates of interest. An improvement in agriculture soon 
became evident. As previously stated, the bank’s operations were at 
first limited to one district. They have since been extended to cover 
all of Lower Egypt and some parts of Upper Egypt. At the close 
of 1905 there were over 185,000 loans outstanding. No loan exceeds 
$2,500. The average size of the loans is about $155. 

Mr. Crumpacker. What is the population of Egypt? 

Mr. Kemmerer. It is between nine and ten million, principally an 
agricultural population, with over 1,000,000 small landholders. 

The peasants have used the money wisely on the whole. There 
have been some abuses, of course. The bank has materially reduced 
the market rate of interest. 

The next question, perhaps, that comes up is, How has the bank 
succeeded as regards the interest of the stockholders? What has 
been its financial success? The Earl of Cromer’s primary object in 
bringing about the establishment of the bank was to benefit the 

35815—08-21 


322 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Egyptian peasant. The bank has, however, paid handsomely as a 
financial enterprise. 

There is a certain amount of common stock. Its par value is £5. 
It is quoted on the London market, and its present price, according to 
the latest English financial papers received, is £10. It therefore 
stands at twice its par value. The cumulative preferred stock pays 
4- per cent dividends. Its par value is £10, and it has stood above par 
in the London market most of the time. The debentures pay 3J per 
cent; their price on the London market varied between £88£ and £91 
during the month of November, 1906, the last month for which I 
have been able to obtain quotations. The 4 per cent cumulative pre¬ 
ferred stock has paid dividends every year. The common stock has 
paid dividends of 4, 6, and 7J per cent, respectively, during the past 
three years. The founders’ shares receive a certain residuum after all 
the expenses have been paid. They have a par value of £5. Their 
market price last March, when I was in Egypt, was about £950. From 
the standpoint of the stockholder, therefore, the bank has been emi¬ 
nently successful. 

From the government’s point of view the bank has had a like suc¬ 
cess. The government guarantees the principal and interest at the 
rate of 3 per cent. The government has never been called upon to pay 
a single cent. The Earl of Cromer has said once or twice that he did 
not believe there was any prospect of the government being called 
upon to make good its guaranty, and anyone acquainted with his 
work knows that he is ultraconservative in such matters. I talked 
with a number of bankers in Egypt and found none who had any idea 
that the government would ever be called upon to pay any part of the 
guaranty. 

RATE OF INTEREST ON LOANS OF EGYPTIAN BANK. 

Mr. Crumpacker. What was the legal maximum rate ? 

Mr. Kemmerer. The rate was 9 per cent, but recently the bank 
asked to increase the size of its capital considerably and the govern¬ 
ment agreed to the proposition on condition that as soon as the loans 
amounted to $35,000,000 the bank should reduce the rate of interest to 
8 per cent, and it has since been so reduced. 

One of the important features of the bill as proposed for the 
Philippines is that it provides for an automatic reduction in the rate 
of interest in proportion as the reserve fund accumulates, so that 
there will be no difficulty in that direction. According to the records 
the bank has made large profits. According to the reports of the 
Earl of Cromer and according to the idea of bankers and busi¬ 
ness men in Egypt there is no probability that the Agricultural Bank 
of Egypt will ever call upon the government to make good its guar¬ 
antee. If you look over the annual report of the bank it will bear 
out that view most emphatically. 

EFFECT OF EGYPTIAN BANK ON PEASANTS. 

The Chairman. What has been the effect of the working of the 
bank upon the character of the peasants of Egypt ? 

Mr. Kemmerer. Of course it is very difficult in a country like 
Egypt, where conditions have been changing so much since the 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 323 

English went there to answer that question positively. I suppose 
that Egypt is one of the finest examples to-day of a good colonial 
government—due principally to the extraordinary ability of the 
Earl of Cromer. There have been so many changes that it would 
be difficult to say to what extent Egyptian prosperity is due to one 
measure or to another. I think that all agree, however, that the 
Agricultural Bank .of Egypt has been an important factor in the 
remarkable prosperity Egypt has experienced during recent years. 
The condition of the peasants to-day is prosperous. 

Mr. Parsons. Since the establishment of the Agricultural Bank of 
Egypt have there been any comparatively hard times ? 

Mr. Kemmerer. No; I think not. I make mention of that point 
in my report. It is not exactly fair to judge the entire future of 
the bank by what it has done during the last three or four years, 
because those years have undoubtedly been years of remarkable pros¬ 
perity. I do not suppose they are fairly representative of long 
periods of time, but the success of the bank has been so great that 
even if it had been half as successful it would still have been a success. 

COMPARISON OF FILIPINO AND EGYPTIAN PEASANTS. 

Mr. Crumpacker. How would the standard as to industry among 
the native Filipino farmers compare with that of the native Egyp¬ 
tian agriculturists? 

Mr. Kemmerer. That is a difficult question to answer. I have 
not been around the islands very much, and my views on that sub¬ 
ject are not worth much. It is my opinion, however, from what I 
have read, from the reports I have received, and the observations 
I have made that probably the Filipino is more intelligent and more 
resourceful than the Egyptian, but that the Egyptian, on the other 
hand, is probably more thrifty and industrious. The Egyptian 
peasants have in the past often been characterized as being shiftless 
and lazy. The Earl of Cromer believed that the peasant had not 
been given a fair chance. Since he has been given a reasonable op¬ 
portunity there is no question but that he has improved wonder¬ 
fully. I believe that when the Filipino is given a chance he is likely 
also to improve in this respect. 

Mr. Webber. Does the Egyptian own the land ordinarily? 

Mr. Kemmerer. Theoretically he does not. There are two or three 
forms of land tenure there. There are a number of conditions that 
complicate matters of land tenure. The Egyptian tenure is, how¬ 
ever, for all practical purposes a fee simple. 

WAGES IN EGYPT. 

Mr. Larrinaga. Have you heard something about the wages paid 
on the Suez Canal as being 20 cents a day in former times? How 
does that compare with the wages at the present time ? 

Mr. Kemmerer. I have not looked up the subject of wages in 
Egypt. The expenses of the peasant are lower and the wages are 
lower than in European countries. Just what the general rate of 
wages for that kind of labor in Egypt is I do not know. There are 
so many petty landed proprietors and the peasants work so much 
on shares that a knowledge of the rate of money wages would not be 
as important for Egypt as it is for a country like our own. 


324 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

VOLUME OF MONEY IN EGYPT. 

Mr. Garrett. Can you state the volume of the circulating medium 
in Egypt? 

Mr. Kemmerer. About $100,000,000, or a little over $10 per capita. 
The per capita circulation in the Philippines is about $2. 

The amount of circulating medium in a country I do not think is 
as important a criterion of the prosperity of a country as a great 
many other items. For instance, we all feel that the United States 
is, on the whole, a more prosperous country than France, but France 
has a much greater per capita circulation than we have. Other fac¬ 
tors must be taken into consideration, such as the rapidity with 
which money circulates and the proportion of exchanges affected by 
means of checks before two countries can be satisfactorily compared 
on the basis of their per capita circulation. 

Mr- Garrett. There is, then, a very much less per capita circula¬ 
tion in Egypt than in the Philippines? 

Mr. Kemmerer. Yes; and undoubtedly Egypt is a much more 
prosperous country than the Philippines. 

Mr. Rucker. From your examination and report and the impres¬ 
sions that you have gained, you are prepared to assert that this agri¬ 
cultural bank has been a success from the banker’s standpoint, it be¬ 
ing capable of mathematical demonstration, but are you prepared 
to assert whether or not it has been beneficial to the masses of the 
peasants in raising the standard of their industry and contributing 
to their prosperity? 

LESSENING OF USURY IN EGYPT. 

Mr. Kemmerer. My opinion is—and I think it is corroborated by 
the opinion of most business men and officials in Egypt—that the 
bank has lessened usury very much and has materially improved 
the conditions of the Egyptian peasants generally.. 

I do not mean to imply that the Egyptians by means of the bank 
have gotten out of debt. They have shifted their debts, I believe, 
from the usurer to the bank and have materially reduced the rate 
of interest they are paying. I doubt very much if there has been 
any appreciable reduction in the total amount of their indebtedness. 
The Egyptian peasant is working on credit just as before, but it is a 
much more equitable and satisfactory kind of credit. . 

PROBABLE SUCCESS OF BANK IN THE PHILIPPINES. 

Another point I wish to make is this: I do not think you can say 
that a system of this kind would have in the Philippines as re¬ 
markable a success as it has had in Egypt. The conditions are par¬ 
ticularly favorable in Egypt for such an institution as I have pointed 
out in my report, but I think the great success of the experiment in 
Egypt is presumptive evidence that it would be a success in the 
Philippines. If conservatively managed by private enterprise on pri¬ 
vate capital and properly examined and controlled by the govern¬ 
ment, I firmly believe it would prove highly successful in the Philip¬ 
pines at the present time. 

Mr. Webber. Did you go out among the peasants in Egypt and 
talk to the masses to find out what they had to say ? 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 325 

^ r * Kemmerer. I did not, as my time was too limited. Further¬ 
more, I did not know the language, and the best I could do was to 
go out and talk with some of the agents of the bank, as well as with 
the bank s competitors and with other business men. 

EFFECT OF EGYPTIAN BANK ON PEASANTRY. 

Mr. TV ebber. What evidence have you that the Egyptian peasants 
themselves have been benefited, or claim to have been benefited ? Are 
their homes better, are their clothes better, and do they get more of 
the pleasure of life? 

Mr. Kemmerer. Their condition has improved greatly in recent 
years. No one can deny that. 

Mr. Webber. What evidence did you see of it? 

Mr. Kemmerer. I was never in Egypt before, and can not per¬ 
sonally make a comparison of the condition of the peasantry during 
different periods of time. I base my opinion upon what I have read, 
upon my interviews with people in Egypt whose opinions are worthy 
of great respect, and upon the remarkable degree in which the peas¬ 
ants have availed themselves of the privileges offered by the bank. 

Mr. Hubbard. Did you see the Earl of Cromer and get his view? 

Mr. Kemmerer. His opinion of the matter, as shown in his reports, 
was that the bank had been a most important factor in the uplifting 
of the peasantry. 

The Chairman. The condition of the Egyptian peasantry since 
that country came under England is one of greater security. 

Mr. Kemmerer. That is undoubtedly true. 

Mr. Garrett. How does the gambling that is characteristic of the 
Filipino compare with that of the Egyptian? 

Mr. Kemmerer. I do not know. When I was in the Philippines 
I heard a good deal of the gambling instincts of the Filipinos, but I 
think perhaps that it is a little overdrawn. The recent success of the 
Philippine Moral Progress League would tend to substantiate this 
opinion. I have heard little or nothing with regard to gambling 
among the Egyptian peasants. 

Mr. Webber. Are the Egyptians under the new system buying 
more goods, or better clothes, or producing more crops that before? 

Mr. Kemmerer. Yes. The figures, such as imports and exports, the 
increase in the tax receipts—although there has been a decided reduc¬ 
tion in the tax rates—together with such matters as railroad freight 
carried, and items of that kind, all taken together are indicative of 
improved conditions. I think no one in Egypt will deny that Egypt 
has been going through a period of great prosperity recently. Some 
people fear it is not stable, it has been so remarkable. 

Mr. Parsons. Do your figures and reports indicate that the most 
profitable part of the business of the Agricultural Bank of Egypt 
have been from loans to the comparatively large landowners? Tak¬ 
ing the figures of 1902, they show that 76 per cent of the loans was 
to owners of 20 or more acres, and that out of 1,000,000 landowners 
there were only about 33,000 that owned 20 or more acres each. 

Mr. Kemmerer. But it shows that there is a very large and in¬ 
creasing proportion of peasant proprietors in Egypt. In 1894 78 
per cent of the landowners were proprietors of small estates of less 


326 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


than 5 acres in area; in 1904 the proportion had increased to 86 per 
cent. 

It shows that the proportion of the total land owned by petty hold¬ 
ers, though small, is increasing, and that the petty landholders are to 
a great extent taking advantage of the privileges offered by the bank. 
The maximum loan, it should be remembered, *is but $2,500. The 
average size of all loans is only about $155. Even $2,500 is not a 
large amount for a person owning a large estate. 

Mr. Parsons. It is a good deal to a man who owns 50 acres. 

Mr. Kemmerer. You must remember that 50 acres in the delta of 
Egypt has a productivity that is simply incomparable with anything 
we have in this country. 

Mr. Webber. They raise several crops a year ? 

Mr. Kemmerer. Yes. 

Mr. Parsons. The agricultural bank in the Philippines, if estab¬ 
lished, would loan to the larger landowners. The expense would 
be less if they did, and would there not be a tendency on the part of 
the bank to prefer the loan of the large landowners, whereas you are 
attempting to provide a bank that will loan to the small landholders? 

Mr. Kemmerer. There would be that tendency there is no doubt, 
because the cost of negotiating a small loan is about as great as the 
cost of negotiating a large one, but the Philippine government and all 
the persons interested in the agricultural bank proposition for the 
Philippines are anxious to have the bank show particular considera¬ 
tion to the small landowner. The bill as drawn for the Philippines 
contains a number of provisions intended to avoid that difficulty. It 
says that only a limited amount of the bank’s funds can be loaned to 
large landowners—only 25 per cent in loans above $2,500; second, 
that no loans above $2,500 shall be made without the express permis¬ 
sion of the secretary of finance and justice; third, that the bank shall 
in all cases show special favor to the small landowner. The gov¬ 
ernment, moreover, by its system of supervision and control, ought 
to be in position to enforce these regulations. 

taxation or mortgages in the Philippines. 

Mr. Webber. Is there a land tax in the Philippines ? 

Mr. Kemmerer. Yes. 

Mr. Webber. Suppose that under this proposed law or banking sys¬ 
tem a Filipino has a farm and it is mortgaged for about all it is worth, 
is that mortgage taxed ? 

Mr. Kemmerer. As to those details I could not answer. 

The Chairman. That is one of the things they have had up in my 
State and it is still unsettled. 

Governor Ide. There is no tax upon personal property in the 
islands. The land tax is assessed upon the value of the land. No 
mortgage or personal property is taxed. 

The Chairman. We will continue the hearing tomiorrow, and I 
trust that all of the members of the committee will be present. Sec¬ 
retary Taft thinks that this is one of the most important subjects ever 
before the committee. 

Thereupon the committee adjourned to Wednesday, January 9, 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 327 


Committee on Insular Affairs, 

House of Representatives, 
Wednesday, January 9,1907. 

STATEMENT OF PROF. E. W. KEMMERER—Continued. 

The Chairman. Professor Kemmerer, you can begin now, and pro¬ 
ceed at your discretion. 

Mr. Kemmerer. I covered in a very brief w T ay at the last session 
the work of the Agricultural Bank of Egypt, the relation of the 
Agricultural Bank of Egypt to the Egyptian fellaheen, and its influ- 
ence among them, the success of the bank as a financial enterprise,, 
the profits realized, and the general financial condition and reputation 
of the institution. I also touched upon the relations existing between 
the bank and the government upon the subject of the government’s 
guaranty, and stated that the general consensus of opinion seemed 
to be that there was no probability whatever that the Egyptian gov¬ 
ernment would ever be called upon to make good its guaranty. 

THE “ FELLAHEEN.” 

The Chairman. Now, right there, in order that readers of this tes¬ 
timony may understand you, won’t you, please, define the term “ fel¬ 
laheen?” 

Mr. Kemmerer. The term “ fellaheen ” is the plural of the word 
fellah, and it refers to the peasant land proprietors of Egypt. 

The Chairman. So that “ peasants ” would be a fair equivalent ? 

Mr. Kemmerer. A fair equivalent, I think. 

The Chairman. So, I think that you had better use the word 
“ peasant.” I know how those who read the testimony might be 
bothered with the words “ fellah ” and “ fellaheen.” 

EXTENT OF PEASANT POPULATION OF EGYPT. 

. Mr. Webber. I would like to know what percentage of the 8,000,000 
or 9,000,000 Egyptians are of that class ? 

Mr. Kemmerer. In 1905 the agricultural population of Egypt com¬ 
prised about 61 per cent of the total population. A large proportion 
of them are small landholders, having farms of less than 50 acres, 
while others, almost' or. altogether landless, are laborers. Many petty 
landowners supplement their earnings by laboring also on large es¬ 
tates. The total number of landholders in Egypt in 1905 was 
1,052,418; of this number, 902,018 were holders of estates of less than 
5 acres, and only 12,038 were holders of estates of over 50 acres. The 
great bulk of the farms in the Philippines, as in Egypt, are very 
small. Fifty per cent of the occupied agricultural land in the Philip¬ 
pines is held in petty farms of less than 2J acres in area; 35.7 per cent 
of the agricultural holdings in the Philippines is comprised of farms 
smaller in area than a.lot 194 feet square, and all but 4.8 per cent of 
the holdings is comprised of farms of less than 12 \ acres in area. 

Mr. Webber. Are any of the bankers Egyptians? 


328 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Kemmerer. The subordinate officials in all of the 72 branches 
of the bank are Egyptians, but the heads of the central establishment 
and the traveling inspectors are Englishmen. 

COLLECTION OF LOANS IN EGYPT. 

One other point that I wish to bring up here is the subject of bad 
debts. The subject of an agricultural bank is never broached but 
that it is suggested that a great number of the loans are liable to 
prove uncollectible or that there is liable to be a great amount of 
delay in the collections; that a large number of foreclosures are liable 
to be necessary, with consequent hardships to the borrowers. This 
is a real difficulty. It is a difficulty that had been previously real¬ 
ized to some extent by the Credit Foncier, the private land bank in 
Egypt, which for many years has loaned money to large cultivators in 
Egypt, and which is still doing a large and thriving business. It was 
a difficulty which the authorities of the Agricultural Bank expected to 
encounter. Accordingly, the bank was careful in character of the 
contract forms used, careful in the investigations made of the finan¬ 
cial standing of prospective borrowers, careful in its investigations 
of the securities offered, and in every other step in the negotiation of 
the loan contract. As a result of the great care exercised, the bank 
has had a phenomenal success in this respect. The results, in fact, are 
almost unbelievable. 

When you consider that there are at the present time, or ’were last 
year, about 185,000 borrowers, most of them petty landowners scat¬ 
tered throughout Egypt, that the average size of their loans was 
about $155 of our money, that none of the loans run above $2,500, and 
that a great number of them are for petty sums, such as $5, $10, or 
$20; when you consider further that this institution has been running 
since 1002 and that it took over many petty loans of the National 
Bank of Egypt that originated years before, the statement made to 
me by the manager, and substantiated by the governor of the Na¬ 
tional Bank of Egypt, will appeal to you, I think, as very striking. 
The manager said to me: “Going over our records as carefully as 
we can, I believe it is a safe statement that we have not £1 of 
indebtedness on our books in a total indebtedness of about $35,000,- 
000 which we will not collect. There have been lapses, but the lapses 
have all been made good. We have,” he said, “ one petty loan which 
we will not be able to collect from the borrower, but the government 
agent who made the loan is responsible for it, by reason of his 
neglect to comply with the bank’s rules, and we will collect it from 
him.” 

FORECLOSURES. 

Now, as to foreclosures, you would expect with so many petty loans 
to have a great number of foreclosures, selling out of farms, and all 
that. The manager told me that up to the time that I was there, in 
March, 1906, foreclosure proceedings had been begun in only 350 
cases—the total number of loans outstanding at that time you will 
recall was 185,000—and a considerable number of loans had already 
been paid off—and that in all of those 350 cases but four of the 
foreclosure proceedings had been stopped before they were con¬ 
summated because settlement had been made. This is certainly a 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 329 

remarkable showing for a bank of this kind, whose loans are mostly 
in small amounts to petty land owners: it is due largely, of course, 
to the great care taken by the bank’s officers, in the character of the 
securities they took, in the character of the borrowers to whom they 
loaned, and in the negotiation of the loan contract to avoid fraud. 

ENFORCEMENT OF COLLECTIONS. 

It often happens that when collections are attempted to be made, a 
considerable number of borrowers can not pay. The reason for these 
delays is often the lateness of the crops,, and this lateness prevents 
the cultivator from making his payment at the time the loan becomes 
due. When the collector goes out to collect the land tax and the 
annuity due the bank and finds that the borrower can not pay the 
money due the bank, for one reason or another, he reports the matter 
to the bank. The bank shortly sends out a special native agent to 
see what can be done. If this agent can do nothing, then the bank 
refers the matter to a special collection department created to deal 
with such cases. This department sends out a lawyer’s letter—a 
threatening letter—and these letters result generally in the collection 
of from 60 to TO per cent of the delinquencies. Then, to the borrow¬ 
ers who are still delinquent, the bank sends out one of its English 
agents to make inquiries. If it is found that the reason for nonpay¬ 
ment is sickness, failure of crops, for which the borrower is not 
himself responsible, or other unavoidable reason, the agent recom¬ 
mends that a certain delay be-permitted in the collection of the loan. 
He is given wide discretion in the matter, and his recommendations 
are almost always followed. If it is found that the case is simply 
one where the man does not wfish to make the payment, or is slack 
in his work, the agent recommends the immediate enforcement of 
the payment. He can recommend any course which he deems ad¬ 
visable, as, for example, the enforcement of a partial payment, or of 
a payment of interest without the installment of the principal. The 
result of this system has been, as I say, that bad debts are not a factor 
in the bank’s operations. This covers the subject in a general way. 
Full details will be found in my report on “ The Agricultural Bank 
of Egypt,” which you have in your hands. 

I will be glad to take up any specific questions the members of the 
committee may wish to ask. 

OPINION OF EARL OF CROMER AS TO EGYPTIAN BANK. 

The Chairman. Did you have conversations with the Earl of 
Cromer 

Mr. Kemmerer. I did. 

The Chairman. How long has he been in Egypt? 

Mr. Kemmerer. He went there shortly after the Arabi revolt in 
1882 or 1883. He has accordingly been there about twenty-three 
years. 

The Chairman. His administration has been recognized as most 
remarkablv successful ? 

Mr. Kemmerer. I should say that the Earl of Cromer is recog¬ 
nized generally throughout the world as one of the world’s great 
administrators. 


330 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

The Chairman. What did he tell you concerning the bank ? "What 
did he give you by way of opinion as to the success or nonsuccess of 
the bank ? What did he say about it generally ? 

Mr. Kemmerer. He said that from the beginning he had had more 
confidence in the Egyptian peasants than had the average English¬ 
man or the average European who lived in Egypt. He had not 
thought that the Egyptians had been given a fair chance, and had 
been of the opinion that if they were given a fair chance and treated 
properly, if their property were not taken ^way from them by exces¬ 
sive and unjust taxes, or by excuses for taxes, they would prove to be 
a much more productive, provident, and thrifty class of people than 
had been generally supposed. He said that he had again and again 
urged capitalists to come into Egypt and to make something of an 
attempt in the line of agricultural loans to small land holders, but 
that they had invariably refused on the ground that they did not be¬ 
lieve that it would be a safe venture because of the thriftless character 
of the peasants and of the unsettled conditions. 

With the aid of his colleagues he finally pushed the matter and 
began to make government loans as an experiment. The loans, he 
said, had proved such a success that he urged the formation of the 
National Bank of Egypt, with the principal purpose of providing 
an institution which would make advances to the peasants on the 
security of their lands and crops. The agricultural loans of the 
National,Bank of Egypt, he said, had been such a success that it be¬ 
came desirable to establish the Agricultural Bank of Egypt. The 
proposition of extending agricultural credit to the Egyptian peasants, 
he said, was one of his pet hobbies, and that he was naturally proud 
of the success of the undertaking. I told him that I had heard a 
great deal of the successful features of agricultural credit in Egypt, 
and asked him if he could tell me of any features in the Egyptian 
plan that he thought could be improved upon—of any mistakes that 
they had made which might serve as a lesson to us in formulating a 
plan for the Philippines. He thought that that was a rather honest 
sort of a question for a representative of another country to ask, but 
he answered it in the spirit in which it was propounded. He said 
that if any mistake had been made he thought that it was in fixing 
the rate of interest as high as they did without making provisions for 
its gradual reduction. 

EFFECT OF COMPETITION ON EGYPTIAN BANK. 

The Chairman. Did you say that the rate was fixed at 9 per cent? 

Mr. Kemmerer. The rate was fixed at 9 per cent. 

The Chairman. I think you said that as a result of the workings 
of the bank competition appeared and the bank has been obliged to 
reduce the rate to 8 per cent. 

Mr. Kemmerer. The point is this: Other banks can not compete 
with the Agricultural Bank of Egypt in loaning money in small 
sums to peasant proprietors. The cost of collecting the annuities and 
the risks involved are such that private concerns can not compete 
with the bank in this branch of the business. The Agricultural Bank 
of Egypt was organized particularly to make this class of loans. Its 
original maximum loan was £300, or $1,500. The maximum was later 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 331 

extended to $2,500. As the bank proved a success, private enter¬ 
prises began to enter the field to capture the larger agricultural 
loans, Private concerns could not compete with the bank on the 
smaller loans, because they could not utilize the services of Govern¬ 
ment tax collectors to collect annuities, but they are competing more 
and more with the bank with regard to its larger loans—loans, say, 
of from $1,000 to $2,500. It is largely on account of the success of 
. e Agricultural Bank of Egypt that there has been such a great 
mcrease m the number of land-credit associations in Egypt in recent 
years. r 

The bank has just reduced its rate of interest from 9 per cent to 8 
per cent, but even at that rate it seems quite probable that it will lose 
a considerable part of its business with the larger landowners and, 
as time goes on, will, confine its operations more and more to small 
loans. Of course this result is most desirable for the small land- 
owners. The rate of interest on all classes of agricultural loans in 
Egypt is declining. Another probable result of this competition is 
that the bank will not make such large profits in the future as it has 
m the past. 

CHARACTER OF EGYPTIAN PEASANTS. 

PThe Chairman. I understand that the Earl of Cromer told you 
that formerly there was a general impression that the peasants of 
Egypt' were a shiftless and thriftless class, who would not make good 
debtors for an agricultural bank. 

Mr. Kemmerer. Yes, sir; he said that that opinion was held by 
a good many prior to the time the Government began its experiments 
in the direction of extending agricultural credit to the peasants. * 

The Chairman. Now, then, is not that impression pretty general? 
Has it not been pretty general concerning the peasants in the Philip¬ 
pines? 

Mr. Kemmerer. I think that that impression is to a great extent 
responsible for the fact that private enterprise has not come into the 
Philippines at all to extend loans to agriculturists. 

The Chairman. Bight in that connection, let me ask if the thrift¬ 
lessness of the peasants has not been found to have been largely at¬ 
tributable to the hopelessness of their situation, to the uncertainty 
of the tenure of their land titles, and the enormous rates of interest 
they were charged, making them practically slaves to the usurers and 
tax collectors ? 

Mr. Kemmerer. Yes, sir. If a peasant had money, he had no guar¬ 
anty that he would be able to use it himself. It was taken away from 
him under the guise of taxes, and he had no guaranty that he would 
be able to keep land if he bought it. Property rights were so insecure 
that there was little incentive for thrift on the part of the peasants. 
The same thing was true in the Philippines, to a considerable extent, 
according to common opinion, until very recently—until the Ameri¬ 
can occupation. 

THE CACIQUES. 

The Chairman. They have a class of men over there called the 
caciques, have they not? 

Mr. Kemmerer. Yes, sir. 


t332 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


The Chairman. In a degree, at least in their tyranny over the 
peasants, they resemble the old feudal lords of mediaeval days. 
That is, they can compel the people to work for them or to give them 
this or that article without compensation. Such is the testimony 
taken by us in the islands. 

Mr. Kemmerer. Yes; I think that is true to a considerable ex¬ 
tent. 

The Chairman. And as a result, the peasants of the Philippine 
Islands for three hundred years have been practically ignorant of 
the fact that they had any rights. They were accorded certain 
privileges, but when it came to rights they knew nothing about 
them, really? 

Mr. Kemmerer. To a considerable extent. I think, however, it 
must be remembered that conditions differ very materially in differ¬ 
ent parts of the islands. I suppose that in some districts that was 
very emphatically true, but in other districts it was not true to any¬ 
thing like the same extent. The cacique, as I understand him, is 
a sort of a cross between a feudal lord and a petty political boss. 

Mr. Rucker. Has that condition been all removed from the Phil¬ 
ippines ? 

Mr. Kemmerer. I do not think it has entirely. These caciques 
exist to-day and they wield a very great control in many parts of 
the islands. I should say that caciquism has not died out by any 
means. I ought to guard my statements in this connection, however, 
by saying that my work limited me very largely to Manila, and my 
opinion on this subject is based more largely upon my reading and 
upon common report in the islands than upon my own personal 
observations. 

Mr. Garrett. Beginning on page 13 of your report, the special 
report on the subject-matter, and continuing on page 14, I notice that 
you state that the Earl of Cromer expresses the opinion that the 
fellahs (peasants) are much less improvident than was generally 
imagined; and then, continuing the discussion on whether the estab¬ 
lishment of this bank has resulted in a decrease of the indebtedness of 
the peasantry, you say that the opinion was expressed by the manager 
of a large banking institution in Cairo that there was considerable 
evidence that the peasants were using the credit obtained from the 
agricultural bank as a means, further means, of extending their loans 
wdth the usurers. And then you say that one of the district agents 
said: “ There is no question but that the fellah supplements his loans 
from the bank largely by loans from the usurer.” Now, beginning 
there with the first paragraph on page 14, I want to ask whether the 
statement contained in there was the conclusion of that district agent, 
or whether it is your conclusion ? 

Mr. Kemmerer. That was the conclusion of the district agent, and 
should have been printed in smaller type, as was designated in the 
corrected manuscript forwarded to Manila for printing. The whole 
of the first paragraph on page 14, except the last sentence, is a quota¬ 
tion from the district agent referred to above. 

Mr. Garrett. Your expression in the following paragraph, of 
course, you say is a mere guess. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 333 
MAXIMUM RATE OF INTEREST ON PHILIPPINE LOANS. 

The Chairman. Now, what would you say as to the maximum 
rate of interest which should be allowed by the law, if we pass one ? 

Mr. Kemmerer. My idea is as expressed in the bill drafted for the 
Philippine government in this report, i. e., that the maximum rate 
fixed by Congress should be at least 10 per cent. It may be that the 
Philippine government will be able to negotiate with a private con¬ 
cern at a less rate, I do not think that it ought to be tied down to 
anything below 10 per cent. I believe that if that maximum were 
fixed by Congress and if the Philippine government were able to 
make an arrangement with a private concern for a lower rate, it 
should be permitted to do so. I am sure the Philippine Commission 
would make every reasonable effort to have the rate fixed as low as 
possible. 

The Chairman. Do you think that the law, if one be passed, should 
provide that the Philippine Commission can, in its discretion, fix the 
rate at anything below 10 per cent? 

Mr. Kemmerer. I should think so; yes. 

DISCRIMINATION IN INTEREST. RATES. 

The Chairman. Do you think that there ought to be any oppor¬ 
tunity left there for discrimination between debtors? Should not 
the same rate be fixed for all debtors, large or small, without oppor¬ 
tunity for discrimination? 

Mr. Kemmerer. That is the condition in Egypt at the present 
time, as I understand it. The question might arise whether in trying 
to make negotiations with private concerns it would be well to tie the 
Philippine government down to any such specific arrangement as 
that. I think the Philippine Commission would take the position 
of requiring a uniform rate of interest, if that position were a pos¬ 
sible one to maintain. I question, however, whether it would be wise 
for Congress to tie them down to any specific regulations with regard 
to that matter. 

The Chairman. Do you think that any institution under the con¬ 
trol of the government should permit any sort of discrimination 
between debtors? Should they not be on an equality—a man that 
borrows $500 should pay no higher rate than one who borrows 
$2,000 from a bank having a government guaranty and making col¬ 
lections by government tax collectors? 

Mr. Kemmerer. There is certainly very much more expense pro¬ 
portionately in negotiating and collecting petty loans than in ne¬ 
gotiating and collecting large loans. There is a great difference in 
the trouble and expense and often a great difference in the risk 
involved. It will take as much trouble and clerical help and as 
much time to negotiate, carry through, and collect a loan of a few 
hundred pesos as it will one of a number of thousand pesos. As I 
have said before, I think that, as far as possible, the banks should be 
induced to favor the small man, even at the expense of some loss. 

Mr. Webber. Do you think that principle should prevail? Should 
not we always keep in mind the principle of “the greatest good to the 
greatest number?” 

Mr. Kemmerer. I think we should. 


334 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Webber. Without reference to the particular expense because 
of the smallness of the loan ? 

Mr. Kemmerer. I think we should always keep in mind the prin¬ 
ciple of “the greatest good to the greatest number” in a proposition 
of this kind. It is of course barely possible that the Philippine 
government might have some difficulty in negotiating with private 
concerns to take this matter up ; and a consideration of that kind 
might be a vital one as to the government’s success or failure in nego¬ 
tiating with private concerns relative to the concession. I doubt 
whether it would, but I should say that a question of that kind would 
be one upon which Governor Ide, or men who are much more familiar 
with that phase of the situation than I am, could pass a more valuable 
opinion. 

Mr. Hubbard. Would not it almost of necessity follow that to fix 
a cast-iron rule here requiring that all these loans should be on an 
absolute equality, would be to make the bank favor the large loans 
and refuse the small loans as far as they could—that is, that they 
would necessarily seek the larger loans because, proportionately, 
on those there would be a much larger profit if the large loan was 
to be executed at the same rate as the small one ? The small loan is 
necessarily very much more expensive, and in our banking practice, 
whatever may be the law in relation to usury, a man who borrows 
$500 for six months will pay more than the man who borrows $6,000. 

The Chairman. Supposing the Post-Office Department should 
charge a man who sends one letter 10 cents for a stamp, and a man 
who sends a thousand letters 2 cents each for postage stamps. 

Mr. Hubbard. The two things are not at all alike. 

The Chairman. You are speaking of a private bank, which is in 
business simply for the purpose of making money. A government 
institution which is in business primarily to accommodate the country, 
and also to make money, must perform its functions so as to effect 
both objects. 

Mr. Hubbard. If you are speaking of a government institution, 
that is one thing. A government institution is primarily for the 
benefit of the agriculture of the Philippines. That is one question. 
If, on the other hand, you are to seek to induce private capital to 
go in and establish an agricultural bank, giving it privileges of such 
a character that capital will deem it proper to go in and take the 
risks contingent upon those conditions, you then are dealing purely 
with a private enterprise. 

The Chairman. We can settle this by asking what rate of interest 
the law fixed for the Agricultural Bank of Egypt. It was fixed at 
10 per cent, was it not? 

Mr. Kemmerer. Yes, sir; that is my understanding. 

The Chairman. And the bank has been a wonderful success for 
the stockholders and for the peasants of Egypt. 

Mr. Kemmerer. Yes, sir. 

The Chairman. It was such a success that they were willing to 
have the rate reduced to 8 per cent ? 

Mr. Kemmerer. Yes, sir. They asked the privilege of increasing 
their stock, and the privilege was granted by the government on 
condition that they would agree to reduce their rate of interest to 
8 per cent from the beginning of the year succeeding that at the end 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 335 


of which the loans outstanding should have reached $35,000,000. 
They agreed to the condition, their loans have since passed the 
$35,000,000 mark, and the rate of interest has recently been reduced. 

The Chairman. Why would not a rule that would be a just and 
proper one to apply in Egypt be a just and proper rule to apply in the 
Philippines, and meet with success there? 

Mr. Kemmerer. I am inclined to think, as I said before, that it 
would be desirable in the Philippines to have a uniform rate of in¬ 
terest. The only point of difference seems to be whether it would 
be wise for Congress to impose such a regulation upon the Philippine 
government, or whether it would be better to allow the Philippine 
government to use its discretion in the matter. 

The Chairman. What I am getting at is this: Whether a pro¬ 
ducer who pays a rate of 9 per cent interest on money borrowed to 
raise a crop is not put at a very great disadvantage if his competitor 
pays only 4 per cent on the same amount of money ? 

Mr. Kemmerer. In the Philippine Islands to-day 9 per cent would 
be a very low rate of interest to the sugar planter. The bill as pro¬ 
posed provides that as soon as this bank shall prove itself successful, 
as soon as it shall show that the risks involved in such loans are not 
as great as is generally supposed, if it is able to make such a showing, 
it will accumulate a surplus, and in proportion as it accumulates a 
surplus, the maximum rate of interest it is permitted to charge will 
automatically go dowm. The reduced rate of interest will not only 
apply to future loans, but will be retroactive, and will apply also to 
all loans still outstanding. People who borrow money when the 
risk is comparatively great, and when the demand for funds is 
large, should pay reasonably high rates of interest, but later on, 
if experience demonstrates that the loans are not great, and if good 
profits are realized by the bank, then the surplus will accumulate, 
the rate of interest will be reduced, and all classes will have the 
benefit of the reduced rate. * '• S 

LIMIT OF AMOUNT OF THIRD-CLASS LOANS. 

Mr. Garrett. The bill as drafted limits to 25 per cent the amount 
that can be loaned in third-class loans ? 

Mr. Kemmerer. There are a number of limitations in the bill pro¬ 
posed for the Philippine government to pass which are intended to 
make the bank favor small landowners as against large ones. The 
amount that can be loaned in large sums is limited to 25 per cent. 
Large amounts can be loaned only on the express permission of the 
secretary of finance and justice. The bank is enjoined to show special 
favor to small landowners, and it is believed that the character of 
the government supervision and control which would be given would 
be such as to practically compel the bank to heed those directions. 

Mr. Gilbert. Can you give me a brief statement of the system of 
land tenure in Egypt? What interest do these peasants of Egypt 
have in the land ? 

LAND TENURE IN EGYPT. 

Mr. Kemmerer. There are several classes of land tenure in Egypt. 
The question of land tenure in Egypt from a theoretical and legal 
standpoint is a very complicated one, but for all practical purposes 


336 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


the great bulk of Egyptian agricultural land may be considered to be 
held in fee simple. The bank has not had any cases of trouble with 
poor land titles. 


CLASHES OF LOANS BY EGYPTIAN BANK. 

Mr. Gilbert. What rule w^as adopted by the bank for the purpose 
of securing loans to smaller borrowers ? 

Mr. Kemmerer. The bank has two classes of loans—one which it 
calls “A” loans, and the other “B” loans. A “B” loan must not ex¬ 
ceed $2,500, is secured by first mortgage on land of a value at least 
double the amount of the advance, and is recoverable in twenty and a 
half years at the latest. An “ A” loan must not exceed $100, is secured 
usually by a chattel mortgage on crops, and is recoverable in fifteen 
months at the most. 

Mr. Gilbert. That is what I wanted to get at. 

Mr. Rucker. How are the loans secured on the crops? On what 
sort of title is it secured ? 

Mr. Kemmerer. I do not know just the character of the instru¬ 
ment. There is a note given, and the crops to be harvested are 
pledged as security. The exact forms used are given in my report. 

Mr. Webber. It is what we call a chattel mortgage ? 

Mr. Kemmerer. Yes; a chattel mortgage. 

The Chairman. Now, Professor, I think we will call on Professor 
Jenks, if you have nothing further to suggest. 

Mr. Kemmerer. Nothing, unless there are some questions. 

Mr. Rucker. Just one moment, please. You are familiar with the 
details of the bill now before this committee, I suppose. Possibly 
you drafted the bill. 

Mr. Kemmerer. Yes; I drafted the bill. 

MAXIMUM AMOUNT OF INDIVIDUAL LOANS. 

Mr. Rucker. In this bill there is a provision that the maximum 
amount of loans made to one person is $15,000. In the Egyptian 
bank the maximum amount is $2,500. Why was that difference 
made ? What is the reason for increasing the maximum there ? 

Mr. Kemmerer. In the first draft of this bill I placed the maximum 
amount at $2,500, as in Egypt, but I talked the matter over with 
several business men in the Philippines and with one banker who is 
interested in the matter and who may possibly wish to finance the 
affair if it goes through, and they all took the position that it would 
be desirable to raise the size of the maximum authorized loan. In 
Negros, for example, there are a number of large sugar plantations, 
and these plantations employ large numbers of persons and require 
considerable capital to run them. It was thought advisable to make 
provision in the bill to enable the bank, if it so wished, to reach 
some of those large sugar estates, not only because it would assist the 
• proprietors of estates themselves, but because it would also assist a 
large number of persons w]io live on the estates and who are depend¬ 
ent upon the estates for a livelihood. When the limit was raised, a 
provision was put in the bill to the effect that not over 25 per cent 
of the capital should be advanced in loans of $2,500 or upward, and 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 337 

that no loan above $2,500 should be made except upon the express 
permission, in writing, of the secretary of finance and justice. 

Mr. Rucker. That is, 25 per cent of the capital stock? 

Mr. Kemmerer. Yes, sir. 

STATEMENT OF PROF. JEREMIAH W. JENKS, OF CORNELL UNI¬ 
VERSITY. 

The Chairman. What is your profession? 

Mr. Jenks. I am professor of political economy and politics in 
Cornell University. 

The Chairman. How long have you been connected with the uni¬ 
versity ? 

Mr. Jenks. Since 1891. 

The Chairman. Have you been in the Philippines? 

Mr. Jenks. Yes, sir ; I have been there twice. 

The Chairman. And also in Egypt? 

Mr. Jenks. Yes; once. 

The Chairman. When were you in the Philippines? 

Mr. Jenks. The first time was in the spring of 1902. In the 
summer of 1901 I was appointed by the Secretary of War (Secretary 
Root) a special commissioner to visit the English and Dutch colonies 
in the Orient, and look into the conditions, as far as I could, of the 
monetary systems, of labor, taxation, and police, with reference to 
showing whether the experience of these English and Dutch colonies 
would be helpful to the Philippine government with relation to pro¬ 
posed measures of legislation for those islands. 

AGRICULTURAL LOANS IN EGYPT, INDIA, AND BURMA. 

On the way to India I stopped in Egypt, and while there I noticed 
the conditions of the country as best I could in the short time that I 
had, although that was not, strictly speaking, an English colony. 
Of course I noticed that they were making agricultural loans, and 
that Lord Cromer seemed to think the loan system one of the best 
things that they were doing for the development of Egypt. In con¬ 
sequence, at that time—of course, before the Agricultural Bank of 
Egypt was founded—I made a report on the agricultural loan system 
and suggested that, in my judgment, something of that kind would 
be extremely useful for the Philippines. 

Later on, in northern India and in Burma, I found that the same 
need of helping the poor man (the peasant, the small landed pro¬ 
prietor) was felt, but that they did not have in India anything like 
the same efficient system of loans as in Egypt. The need, neverthe¬ 
less, was felt, and they were making loans there through the govern¬ 
ment officials. 

I went from India, where I spent something like two months, to 
Burma, to the Federated Malay States, the Straits Settlements, 
Sumatra, and Java; from there to the Philippines, where I prepared 
my report. 

The Chairman. What did you learn when you were in Egypt as 
to the condition of the peasants? 

Mr. Jenks. There is not much to be added to what was suggested 
by Professor KemmereL 
35815—08 - 22 


338 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

EFFECT OF EGYPTIAN BANK ON PEASANTS. 

I was there in the fall of 1901. At that time the National Bank 
of Egypt had been making loans for about two years on a 10 per cent 
rate. They had loaned in 1899 £E.31,500, the equivalent of some¬ 
thing more than $150,000 of our money; in 1900, £E. 137,781, some 
$688,905, and the loans since that time have been rapidly increasing. 
The system that was then used by the National Bank of Egypt was 
afterwards adopted, practically, by the Agricultural Bank of Egypt. 
This system was the same that has been since followed. A careful 
investigation was made of the credit of the smaller landowners when 
the loans were made, and it was found that the bank was meeting 
with practically no losses, while the effect of making these loans was 
good, not only in helping the economic conditions of the country, but 
also from an educational point of view. It was very evident that it 
was improving the general character of the peasants themselves, both 
industrially and educationally. 

The Chairman. Did you meet Lord Cromer while in Egypt? 

Mr. Jenks. Yes; several times. 

The Chairman. What did he say to you? 

OPINION OF LORD CROMER ON EGYPTIAN BANK. 

Mr. Jenks. Practically the same thing that has been reported to 
you already by Professor Kemmerer, that the agricultural loan 
system was one of the things in which he had been most interested 
and that it promised to be of very great good to Egypt. Of course, 
he said, he considered it an experiment still and would so continue 
to consider it for three or four years more. As you know, he is a 
very conservative man. However, so far there seems to be no sign 
of the business of the bank falling away. 

USURY IN EGYPT. 

The Chairman. While in Egypt you heard of the usurious rates 
of interest charged the peasants, did you not ? ' 

Mr. Jenks. Yes, sir. 

The Chairman. What were they there? 

Mr. Jenks. From 2 per cent a month to 5 per cent a month. They 
were practically the same there as throughout all the East. They 
were the same in Egypt as in northern India and in Burma, rates of 
from 2 per cent to 5 per cent a month—sometimes even higher than 
that. It seems to me that it amounts to this—the usurer takes all 
that he can get. 

There is another point in this connection that has not as yet been 
brought out, I believe. In many cases the poor landholder prefers 
to deal even on worse terms with the usurers rather than with gov¬ 
ernment officials or with the representatives of a large bank, because 
he is treated in a more considerate way personally. In northern 
Burma and in Java, for example, I found this statement made: That 
when money was loaned a man by a usurer—often a Chinaman or an 
Arab—if he could not pay it at exactly the proper time the usurer 
would say, “Why, that makes no difference,” and perhaps would 
extend the loan and lend the man a little more money, and in that 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 339 

way lead him on until he practically got control of his property. 
The same thing is true in Egypt. The government has had to take 
very great pains to keep the usurers from getting control of the prop¬ 
erty of the peasants. In Burma and India the rule is, when a loan 
is made by the government, that an official is sent to collect the money 
when it is due, just as a tax collector, and the payment of the interest 
and loan is enforced. There is not so great consideration in the col¬ 
lection of the loan as is shown on the part of the usurer, so that in a 
good many instances when the government would make the loan at 
8 per cent and the usurer would charge 40 per cent or 50 per cent, 
the borrower preferred the usurer. 

One of the chief advantages of the government taking control of 
the system in some form or other is to teach the people regularity in 
the matter of the payment of their loans, and also give them some 
idea of the way in which they ought to manage their business affairs. 
In some cases they are practically children, so far as knowledge of 
business is concerned, and act on impulse. 

AGRICULTURAL LOANS IN INDIA AND BURMA. 

The Chairman. Have they anything analogous to the Agricultural 
Bank in Burma or India? 

Mr. Jenks. No; but the matter has been thoroughly studied in 
India, particularly in southern India—Madras. Bills have been pre¬ 
pared on the subject, but there is no institution of that kind yet estab¬ 
lished, as far as I know. The loans that have been made in India 
have been made through government officials and out of the govern¬ 
ment treasury, in individual cases, where it seemed to be necessary, 
and where they thought that it could be done. Of course the gov¬ 
ernment in Burma is, practically, very paternal in a good many cases. 

CHARACTER OF BURMESE. 

The Chairman. Is it your impression that the natives of Burma 
are the equal of the natives of the Philippines? 

Mr. Jenks. I should be inclined to think that the natives of Burma 
are more like the Filipinos in personal characteristics than are the 
natives of Egypt. They are a people who take great delight in hav¬ 
ing a good time, in entertainments and the pleasures of life. The 
men are very generally lazy and improvident and addicted to gam¬ 
bling. The women,, on the other hand, are apt to be saving and 
industrious. 

The Chairman. Are you familiar with Egyptian finance? 

Mr. Jenks. My familiarity is largely one obtained from reading and 
from talking with other people. I have had only a comparatively 
short experience in those countries. For example, I was in Burma 
less than a month, in the Philippines for only three months during 
my two visits, and in Egypt only three weeks; while one can get 
impressions in this way, these impressions are not, after all, as good 
as the knowledge of people who have lived in those countries for a 
long time. I have also, naturally, in connection with my university 
work, where I have to teach on these subjects, tried to familiarize 
myself with.the conditions by reading and by talking with people who 
are authorities. M 


340 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


COMPARISON OF FILIPINO AND EGYPTIAN PEASANTS. 

The Chairman. What is your opinion of the Filipino peasants as 
compared with the Egyptian peasants ? 

Mr. Jenks. I should say here, again, that my opinion is limited by 
the brevity of my experience in these countries. I think that the 
Egyptians are a little steadier in their habits than are the Filipinos. 
At any rate they are a little less inclined to squander their money. 
At the same time an improvement in the condition of the Egyptians 
has been noticed during the last ten or fifteen years, and it certainly 
is the opinion of the officials in Burma and northern India that the 
native Indians and the native Burmese have learned a good deal in 
the way of better business habits from contact with the officials in 
the negotiation of their loans. Lord Cromer said that the Egyptians 
were generally considered indolent and thriftless, but there had been 
little difficulty in collecting loans. I have no reason to doubt that 
the same effect would be likely to follow in the Philippines if we were 
to adopt a similar system there. If we were to put in the way of the 
Filipinos an opportunity of improving their condition somewhat, and 
get them into the habit, of paying at regular intervals small sums on 
their debts, I think that the effect would be the same on the Filipinos 
as it has been on the Egyptians, Indians, and Burmese. 

The Chairman. You think that necessarily the establishment of 
the proposed bank would have a great educational effect upon the 
people ? 

Mr. Jenks. I have been of the opinion that the educational effect 
would be as good as the economic effect. 

The Chairman. They would become more intelligent, of course. 

Mr. Jenks. Decidedly so, of course. If their habits improve, their 
economic condition will also improve. 

The Chairman. It will teach them system, regularity, and punctu¬ 
ality ? ■ 

Mr. Jenks. Yes. 

The Chairman. Are you familiar with the provisions of the bill 
now before the committee ? 

Mr. Jenks. Reasonably so. Yes; I have read it with a good deal 
of care. 

CHARACTER OF LEGISLATION ADVISABLE FOR PHILIPPINE AGRICUL¬ 
TURAL BANK. 

The Chairman. Will you, in a general way, please give your ideas 
as to what legislation we ought to enact in this connection ? 

Mr. Jenks. It has seemed to me that there were two things that 
ought to be kept in mind. In the first place, if we are aiming at hav¬ 
ing an agricultural bank there we want to be sure to get it. That is 
the first thing. So far as I can gather from what I have read and 
from talking with others, people are not very anxious to put their 
capital into the Philippines in a venture of this kind. It seems to 
me that any bill which is passed by Congress should leave a good deal 
of discretion with the Philippine Commission in the matter of nego¬ 
tiation. It is my opinion that if restrictions are imposed too rigidly 
by Congress capitalists might hesitate to invest in the bank, and this 


HEARINGS BEFORE COMMITTEE-ON INSULAR AFFAIRS. 341 

would result in our not getting any bank at all. So that I should 
say in the first place that care ought to be taken not to place too many 
restrictions upon the Philippine Commission. It is essential that 
they have a pretty free hand in the negotiations. Then, after that, 
it is my opinion that the general purpose of the act itself should be 
6 • k ene fiting of the agricultural interests in 

the Philippines, particularly the small landowners in the country dis¬ 
tricts. 

Those are the two general principles that, in my judgment, ought 
always to be kept in mind in framing the proposed legislation. 

I do not know whether you care to have me consider in any detail 
the provisions of the bill or not. I understand that the bill before 
us was prepared originally by Doctor Kemmerer, after consultation 
with others in the Philippines, for the Philippine Commission, and 
therefore it naturally includes many conditions which ought to be 
adopted there in all probability, provided the negotiations can be 
made with the bank in such a way that they can be adopted easily. 
It might be that here and there some of them would have to be 
modified. 

NECESSITY OF GOVERNMENT GUARANTY. 

The Chairman. If there is a guaranty it will be more easy to 
negotiate than without it? 

Mr. Jenks. From what I know of the conditions there it would 
seem to me a practical impossibility to get this money without a 
guaranty. In the first place the capital has to come from the United 
States or some other country. It is not in the Philippines. 

RATE OF INTEREST OF GUARANTY. 

The Chairman. What rate of interest ought the guaranty to be— 
3 or 4 per cent ? 

Mr. Jenks. I think 4 per cent. 

The Chairman. Do you think that 3 per cent would suffice? 

Mr. Jenks. I doubt it. There are too many opportunities for in¬ 
vestment of capital where the investment pays more than 3 or 4 
per cent. I think that the rate ought to be 4 per cent. 

BENEFITS TO BE DERIVED FROM ESTABLISHMENT OF BANK. 

Mr. Gilbert. In what way will the poorer classes, the peasantry of 
the Philippines, be benefited by being encouraged to borrow money at 
8 per cent ? What particular line of investment would they make use 
of in the expenditure of that money? 

Mr. Jenks. I think that there are two main things that should be 
kept in mind. In the first place a very large percentage of the poorer 
Filipinos are now borrowing from the usurers and are paying very 
high rates of interest—from 20 to 100 per cent and over. It has 
been the experience in Egypt, in Burma, and in northern India that 
in many cases they would borrow from the bank at 10 per cent in 
order to pay off the amounts owed the usurers, and would thus reduce 
their interest rates from 30 to 40 per cent. ^ , 


342 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


RESTRICTION AS TO USE OF MONEY LOANED. 

Mr. Gilbert. Is that money used for practical purposes or for 
profitable purposes? 

Mr. Jenks. It is unquestionably true that in a good many instances 
loans have been made by the usurers which have been used for the 
purpose of giving the borrowers some sort of amusement. For in¬ 
stance, in Burma, this expense was sometimes incurred in order to 
pay for a wedding. The Burmese are very fond of wedding feasts 
and things of that kind, and so the money borrowed would be spent 
in this way, and the borrower would be saddled with the debt. That 
is one of the advantages of government loans. When a man asks for 
a loan he is questioned as to what he intends to do with the money. 
In his application for a loan he is required to make a specific state¬ 
ment of the purposes for which he desires to use the money. 

The Chairman. I should think that that was an exceedingly im¬ 
portant feature. 

Mr. Jenks. Beyond any question. It is one of the most important 
features. If a man does not make the use of the money as set forth 
by him in his application, the debt immediately becomes due; and 
besides he is subject to punishment by fine or imprisonment, or both. 
He has not only violated his contract, but he has committed an 
offense similar to perjury, because he has violated his word as set 
forth in the contract. That is one reason why we have thought the 
agricultural bank extremely important, because it would keep track of 
the way the money borrowed is expended. The bank would not lend 
money except to help agriculturists to buy draft animals, to purchase 
seed, to purchase agricultural implements, or for similar purposes. 
Modern agricultural implements are going in there more and more. 
The purpose of the bank is also to enable the peasants to pay off the 
money that they have borrowed from the usurers at much higher rates 
of interest. • 

Mr. Olmsted. Supposing a Filipino borrows money from this bank 
to buy machinery or draft animals with, and then, if he wants to give 
a feast, he goes to the usurer and borrows additional money just the 
same—the result would be that he would be still deeper in debt. 

Mr. Jenks. There is this to consider: If he borrows from the bank 
in the first place, the bank would have his security; and the chance 
of his falling into the hands of the usurer would be considerably less. 
May I venture to add a word also in answer to this question, as sup¬ 
plementary to what Professor Kemmerer has said in reference to 
the larger loans ? Of course it is known that owing to the rinderpest 
the draft animals in the Philippines have very largely died, and on 
some of the larger estates it has been necessary to expend large sums 
of money to supply new draft animals; likewise for the purchase of 
improved agricultural machinery large sums are needed, so that in a 
general way some of the largest estates would like this bank, for 
they want to install more modern methods of agriculture, and they 
really need large loans. 

Mr. Rucker. It is seen to that the money is thus employed. Is 
this attended to by the agent of the bank or the government? 

Mr. Jenks. By an agent of the bank. 

Mr. Rucker. He is a kind of an administrator of the money for the 
bank. For instance, in other words, if a man says that he wants to 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 343 

buy cattle or machinery the government sees to it that the money is 
so invested, this being done through an agent of the government. 

Mr. Jenks. Not a government agent, but an agent of the bank. I 
think that the plan ought to be followed that is followed in Egypt as 
to the bank’s assistants. 

Mr. Rucker. Then you proceeded to say that if the money was 
not expended as stated in the application the borrower was subject 
to fine or imprisonment, or both. By what authority would this be ? 

Mr. Jenks. That, of course, would be under the general law. That 
would be, presumably, part of the law passed by the Philippine Com¬ 
mission, and it would simply make the loan fall due and the borrower 
would be brought into the local court. 

Mr. Rucker. This is your idea; if a man says that he wants $100 
with which to purchase farm animals and he invests $80 of it in that 
way and the remaining $20 in household furniture, that he would be 
guilty of violating a penal statute? 

Mr. Jenks. That would be settled by the Philippine Commission 
when they passed the law; but the suggestion has been made that 
in the case of a small borrower he would be expected to tell with a 
good deal of particularity just how he intended to use that money. 
The money would then be paid out to him in a limited sum. 

Mr. Rucker. Is not that one reason why the small man is forced 
to borrow from the usurers, from the man who will lend without re¬ 
quiring such particularization as to what he is going to’ do with it? 

Mr. Jenks. That might be. But there are other things to be said 
in connection with that, also. If a man really wants that money for 
the improvement of his small land holding he won’t object particu¬ 
larly to saying so. If he wants to get $10 or $15 or $25 to squander 
he would hesitate to say so. It is certainly true that the government 
of the Philippine Islands does not care to guarantee the interest on 
any bank investments except for the special purpose of improving the 
agricultural conditions of the country. 

Mr. Rucker. But it seems to me that we might, if we should pass 
a bill like this and empower the Philippine Commission to enact 
laws like those you have suggested, thereby driving the legitimate 
business of the bank entirely away, and then force it to do business 
without a profit except the 4 per cent guaranty from the United 
States or from the Philippine government. The bank might rest on 
its oars and not do any business at all, knowing that the 4 per cent 
interest was assured. 

Mr. Jenks. The guaranty would include the interest alone. 

Mr. Rucker. Yes. 

Mr. Jenks. The opportunities of making money in connection with 
this business are, it seems to me, good enough there, so that there is 
no particular likelihood of the owners of the bank being content 
with 4 per cent interest. The presumption is that they can make at 
least 6 or 7 per cent. 

PROBABILITY OF SECURING INVESTMENTS OF MONEY IN BANK. 

Mr. Rucker. Is it not true that a large amount of capital is in¬ 
vested to-day at 4 per cent, and is seeking investment at 4 per cent? 
Could we not hope to get money invested without a Government 
guaranty of 4 per cent ? 


344 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Jenks. Oh, yes; beyond a doubt, in this country. But, at the 
same time, where money is invested at 4 per cent that is done in this 
country or in England or in some of the other more important coun¬ 
tries where the investors can handle the money easily, and not in 
remote countries like the Philippines. 

Mr. Rucker. This 4 per cent is guaranteed over and above the ex¬ 
penses of administration. 

Mr. Jenks. The point is this, as provided in the bill, that the 
ordinary expenses or administration are to be paid first. 

Mr. Rucker. The ordinary expenses include the collection, inspec¬ 
tion, taxes, and all those things. 

Mr. Jenks. The regular expenses that are ordinarily so taken out. 

Mr. Rucker. So that it only means 4 per cent net. 

Mr. Jenks. Yes; but there is also this provided—at any rate, it 
should be provided—that in a question of this kind the government 
should exercise close enough supervision so that the money would not 
be expended in high salaries, etc., in order to cover up profits. 

Mr. Rucker. Would it not make some of its people a little resent¬ 
ful if they have good friends in the bank and they should not get 
appointed to good paying positions in the bank? 

Mr. Jenks. In the first place, the bank is to be started by private 
capital. The money is to be raised entirely from private sources. 
It is to be raised under as careful restrictions as the government can 
put on it. There would, of course, always be temptation, as there is 
not merely in public institutions, but in private institutions. But 
it is also true that in private enterprises, generally speaking, the 
directors and chief stockholders are looking after dividends, and they 
are not likely to put in incompetent help. I think, if we may judge 
by experience, that, speaking broadly, incompetent help is more likely 
to get into public institutions than into private. With the likelihood 
of making in this bank dividends much above 4 per cent I do not 
think that there is any danger. 

The Chairman. What was the guaranty in Egypt? 

Mr. Jenks. Four per cent, I believe; was it not, Mr. Kemmerer? 

Mr. Kemmerer. Three per cent; but in Egypt the guaranty is on 
the principal, while here the guaranty would be on the dividends 
only and not on the principal. 

Mr. Jenks. Three per cent in Egypt and a guaranty on the prin¬ 
cipal also. 

SCOPE OF GOVERNMENT GUARANTY. 

Mr. Olmsted. Does this not amount to a guaranty of the principal, 
because there could be no profit unless the principal is unimpaired? 

Mr. Jenks. No. To illustrate: If the bank should make a serious 
failure after the government had paid these 4 per cent dividends for 
two or three years the government would lose what it had thus paid 
in, but if the bank had lost also its capital the government would 
not be compelled to pay up that capital. 

The point you have in mind, I think, is this: If the bank went into 
liquidation it would be expected that in the first place the regular 
legal obligations of the bank would be paid, then the capital would be 
paid, and then the government claim to anything that it had paid 
out would be liquidated; so that if there were money enough in the 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 345 

bank its capital would be paid up before a settlement would be made 
with the government. 

Mr. Olmsted. Then the government would not have to pay more 
than the 4 per cent guaranty. 

Mr. Jenks. No; merely the 4 per cent guaranty. 

The Chairman. The fact that the principal is not guaranteed 
would constitute a strong inducement for energy, care, and industry 
on the part of the capitalists, would it not ? 

AMOUNT OF GUARANTY. 

Mr. Jenks. It would seem to me so. I think, perhaps, Mr. Chair¬ 
man, that I might add a word also as to the amount of this govern¬ 
ment guaranty. It seems to me that the guaranty is not, after all, a 
serious matter. As was explained yesterday by Governor Ide, the 
financial situation of the Philippine Islands is such that it would 
seem that it could without any serious difficulty meet any obligation 
of that kind that might come up even in the event of the bank being 
a complete failure. But there are two things to be said along that 
line. In the first place, suppose the bank is organized with a capital 
of $5,000,000, as has been suggested; the amount of the guaranty then 
would be $200,000 a year. If it seems after the first two or three 
years that the bank is going to be a failure, and it then goes into liqui¬ 
dation, the government’s obligation would, of course, cease there be¬ 
fore large sums have been lost. If, however, on the other hand, the 
bank is reasonably successful and wishes to increase its capital, that 
would indicate that the bank was so much of a success that the gov¬ 
ernment would not be called upon to pay anything, beyond any doubt. 

It is suggested in the bill that the highest possible limit of the obli¬ 
gation of the Philippine government would be half a million dollars 
a year. That woulcl mean that the bank might be successful enough 
so that it could and would increase its capital stock until it should 
amount to $12,500,000. If afterwards it should wish to increase its 
stock any more, the government’s guaranty would not be increased 
over the limit of a capital of $12,500,000—i. e., $500,000 a year—while 
the prosperity leading to the increase of capitalization would make 
it certain that the government would never be called on to pay any¬ 
thing. 

PROFIT FROM RECOINAGE OF FILIPINO PESOS. 

I think that I may add another point that may have escaped the 
attention of the committee, which makes it clear that the Philippine 
government could not be burdened unduly by the guaranty. Owing to 
the increased price of silver it has become necessary for the Philippine 
government to recoin its silver pesos. It is necessary, of course, to 
recoin them at considerably lighter weight. Something like 34 per 
cent less silver will be in the new coins than in the old ones. Accord¬ 
ing to the most careful estimate that can be made, the government is 
practically forced to make a profit out of this recoinage of the silver 
coin in the Philippine Islands so large that, if that profit were in¬ 
vested at 4 per cent interest, it would be, in itself, considerably more 
than any possible loss that could come under this bill with the bank 
capital of $5,000,000. What I have just said can be added to what 


346 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

was stated yesterday by Governor Ide as to the ability of the govern¬ 
ment to meet any possible emergencies that might arise. 

The Chairman. Will you give us the figures in detail on that 
proposition ? 

Mr. Jenks. You mean, I suppose, the figures in detail with refer¬ 
ence to the profit on the monetary system. That is what you have 
in mind. 

The Chairman. Yes; the seigniorage. 

Mr. Jenks. The present pesos in the Philippine Islands, as you 
know, are of silver, 416 grains; that is practically 27 grams, nine- 
tenths fine. The new pesos are 20 grams, eight-tenths fine. The 
change in the fine silver content has been reduced about 34 per cent 
in making this recoinage, so that in the recoinage there is a saving 
of about 34 per cent. 

Mr. Kemmerer. The last figures are, I think, about 34. Of course 
there is additional profit in the subsidiary coins. 

Mr. Jenks. There is this profit of about 34 per cent on the pesos, 
and I think that we might add still further that at the present time, 
owing to the high price of silver, these Philippine pesos would be 
worth in Manila as silver bullion, if they could be exported, some¬ 
thing like 10 to 12 per cent more. Of course it varies from day to 
day, depending upon the price of silver. The government takes 
them in at their face value because it has forbidden their exporta¬ 
tion. If it had to pay for the silver for this new coinage, it would 
have to pay this 10 to 12 per cent more, so that it is fair to add to 
the 34 per cent gain to which I have referred the added value that 
there is in the bullion now, which would be something like 10 per 
cent more, according to the estimates that we have been able to make. 
We think that there will in all probability be a net profit from the 
recoinage of from six to seven million dollars, gold. 

The Chairman. At 4 per cent, that would be about $250,000. 

Mr. Jenks. As estimated, the largest amount of the guaranty of 
the bank is not over $200,000 a year, with the $5,000,000 capital. 
Even if we wanted to pay out considerably more than that the inter¬ 
est on this seigniorage profit would be enough to cover it, so that it 
seems to me that there is no question whatever as to the ability of 
the Philippine government to meet all possible financial obligation. 

Mr. Packer. What is the cause of the rise in silver? 

Mr. Jenks. It is rather difficult to say. I am not interested in 
silver except in this way. There have been three or four reasons 
given. In the first place, the output of gold has been very materially 
increased, and I think that there can be no question whatever that 
this increased output of gold is bound to have an increasing effect on 
the price of silver bullion. In addition to that, the demand for silver 
bullion for use in the arts has been very decidedly increased, and 
again, the demand for silver bullion for coinage purposes has also 
been increased. 

Mr. Rucker. Has that had anything to do with the price of silver? 

Mr. Jenks. Why not? 

Mr. Rucker. I do not know. I used to hear it controverted. I 
wanted to get your views. [Laughter.] 

Mr. Jenks. The United States is now buying silver for subsidiary 
coin. Germany will doubtless have to do this also before long, and 
France is likewise buying it. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 347 

Mr. Rucker. The United States is buying it now? I thought they 
quit a little while ago. The price was said to be too high. 

Mr. Jenks. Yes; it stopped buying it a few days ago.. It must 
]? u y again before long. There is also the added demand for silver 
for the arts. 

Mr. Rucker. If we kept on buying it, the price would be as it used 
to be? 

Mr. Jenks. It depends upon how much is bought. 

The Chairman. Gentlemen, this argument is not quite germane; I 
think that we had better get back to the subject of the agricultural 
bank. 

DISCRIMINATION IN RATES OF INTEREST ON LOANS. 

In view of the fact that the Rank of Egypt fixed by law, or by 
statute or ordinance, the same rate of interest, do you think that we 
ought in any legislation that we may enact to provide for any dis¬ 
crimination in the interest charges between the small and large bor¬ 
rowers in the Philippines, or ought we to do the same as was done in 
Egypt, and provide the same rate for all borrowers? 

Mr. Jenks. I speak on that question with a good deal of hesitation, 
but I feel that that is a matter that ought to be left to the discretion 
of the Philippine Commission, for this reason: We may have trouble 
in raising the capital.- I see no reason why Congress should not put 
a maximum limit of, say, 10 per cent, but as yet we do not know who 
is willing to invest the money. I think that two things may be taken 
into consideration by the people who propose to invest money in this 
way. One is the government guaranty, which, I think, is absolutely 
essential. Another is the opportunities there are for making addi¬ 
tional profits. If they should be held rigidly to the same rate for all 
parties they would,, in all probability, lose here and there a good many 
large loans. There are, of.course, private banks in the Philippines. 
And as conditions improve there there are going to be more and more 
of these banks ready to advance money at lower rates, and I am 
inclined to think that the proposed agricultural bank would be likely 
to lose some rather large loans that would still be profitable at a 
much lower rate of interest, if they had to ask the same rate for all 
loans, notwithstanding there is a much larger expense and a pro¬ 
portionately greater risk in making the small loans. I was going to 
say that I quite agree with what has been suggested before, that it is 
a desirable thing not to have the smaller borrowers pay more than 
the larger ones do; but it seems to me that it is still more desirable 
that the small borrowers be put in a position where they can borrow. 
We must not make so severe conditions that we fail to get the bank. 

The Chairman. Don’t you think that it should be the purpose of 
the bank to establish such a rate for all borrowers in order that on 
its whole business it may make some profit ? 

Mr. Jenks. Beyond question. 

The Chairman. Not by giving the power to discriminate between 
small borrowers or between two borrowers of equal amounts. In 
other words, there should not be any favoritism under Government 
supervision or where the Government is giving the guaranty. 

Mr. Jenks. I quite agree with you that it is a desirable thing to 
follow the plan that has been followed in Egypt and see to it that 


348 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

there is no discrimination made. On the other hand, I think it 
extremely, important that we get this bill passed and this bank es¬ 
tablished, and when it comes to the negotiation for establishing the 
bank the Philippine Commission should, if it thought necessary, 
permit discrimination. I do not know what the Philippine Com¬ 
mission ought to do before I know the conditions under which they, 
will be placed. It seems to me that power should be given to them to 
settle that question. I have not now sufficient knowledge of the money 
market to express an intelligent opinion as to what ought to be done. 

The Chairman. Suppose that one man is charged 9 per cent and 
another one raising the same articles on the same amount of land 
is charged one-half that rate, is he not given a very great ad¬ 
vantage, so that he could undersell his competitor in that immediate 
market ? 

Mr. Jenks. That suggests another point. I should be quite in¬ 
clined to the opinion that borrowers under the same conditions 
should not have any discriminations made as to .them at all, but 
in our own country we know very well that if a man wants to borrow 
$50,000 or $100,000 on excellent security he can get it at a consid¬ 
erably less rate of interest than could a poor man on a small amount 
at a greater risk. 

The Chairman. Some of the greatest abuses in the interstate 
commerce act have come in under the interpretation of the law’s 
words u under similar conditions,” and some of the greatest abuses 
are now going on under the interpretation of that clause. If you 
permit them to say that rival or joining owners of estates shall be 
permitted one to borrow at 4 per cent or 6 per cent and the other at 
10 per cent you give an opportunity for favoritism and discrimi¬ 
nation. 

Mr. Jenks. I see no reason why the restriction can not be made 
as you yourself implied as to payment. of the same rate if con¬ 
ditions are the same. It should be kept in mind also that it is 
proposed to have two government directors in the bank to watch 
that all the time. 

The Chairman. We had Government directors on the Union Pa¬ 
cific Railroad, and I had a man tell me that he heard one of those 
directors say that one of the attorneys of the road wrote his (the 
director’s) report. The Philippines are remote from here. Some 
of the islands are rather difficult of access from Manila at present. 
My own idea is that we should here, in so far as possible, throw 
restrictions around the loaning of money with a government guar¬ 
anty back of it, so as to prevent any sort of favoritism or dis¬ 
crimination by a government official or a bank official, or by anybody 
else. 

Mr. Jenks. I agree fully with the purpose that you have in mind. 
The question is whether it would not be wiser, after all, to leave 
the matter of discrimination with the Philippine Commission, which 
will have to make the final negotiations. The members of the 
Philippine Commission, if I may be permitted to say this, have more 
interest in making a success of a thing of this kind than has any¬ 
body else. 

Mr. Olmsted. As we do not propose to guarantee the capital, of 
course those who furnish the capital are interested in preserving the 
bank and making a profit on their investment. Will not the result, 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 349 

therefore, be that they will be just as conservative in making loans 
as any other concerns would be? If we compel them to charge a 
fixed rate of interest, will not the results be that we will put the 
screws onto these people so ‘that they will get nothing out of the 
bank at all ? 

Mr. Jenks. With the rate of interest that is suggested here, of 
10 per cent, it will beyond any question be profitable to the bank to 
make loans in very small sums to the poorer cultivators whenever 
their securities are satisfactory. 

Mr. Olmsted. Would you propose to secure these loans on the draft 
animals, or on the crops, in the nature of chattel mortgages? 

Mr. Jenks. That might be taken on the smaller loans. On sums of 
$100 and less security of that nature might be accepted. 

Mr. Olmsted. But if the rinderpest should take away the cattle 
the security would then go out from under the loan. You would not 
expect the bank to lend money on that class of security at as low a 
rate of interest as on a first mortgage on a farm ? 

Mr. Jenks. That is the point that I had in mind a moment ago. 

Mr. Garrett. Is there a provision in the Philippine agricultural 
bank bill that the bank shall oversee what is done with this money? 

MANNER OF COLLECTING LOANS. 

Mr. Jenks. Yes. I think I might add a word there, because I 
gather from what was said yesterday that there was some doubt as 
to the part that the government officials would play in the matter. 
The loans are not made by government officials, but by agents of the 
bank. The part that the government official plays is simply this: 
That when he is collecting taxes he is also given claims of the bank, 
and he makes the collections at the same time, so far as it does not 
interfere with his official duties. On the other hand, if a borrower 
defaults it is the business of the tax collector merely to report the 
case to the bank. If the collection has to be made through the courts, 
the bank, not the government official, presses the claim. That ques¬ 
tion brings up another point in this connection that is very im¬ 
portant. While it is quite worth while for the people of the Philip¬ 
pine Islands to feel that the Philippine government is doing what 
it can to secure these privileges for them, it would be unfortunate, I 
think, if the government itself should have 'to enforce by legal process 
the collection of these loans. 

Mr. W ebber. The Egyptian banking system having been cited here 
as a great success, and the reason why this bill should prevail, there 
being no discrimination over there as to interest, the rate being the 
same to all, why should npt the same thing prevail here? 

Mr. Jenks. I have said that it seems to me that it is a desirable 
thing to encourage that. But the Philippine government has not yet 
succeeded in getting the money needed. The only proposition that I 
have to make is that the Philippine Commission be left a free hand 
in making its negotiations. 

^;P| r INTEREST GUARANTEED BY WHOM? 

Mr. Rucker. This guaranty is not a guaranty of the United 
States Government, but of the Philippine government? 

Mr. Jenks. It is a guaranty of the Philippine government. 


350 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


Mr. Rucker. But the United States Government is really back of 
it, is it not? 

Mr. Jenks. As that raises a constitutional and legal discussion, I 
prefer not to enter into that. As I understand it, the situation is this: 
The Philippine people, through the only representative that they have 
in the United States, the Philippine government itself and the War 
Department, are asking that they be allowed, through their own 
system, to pay out of their own pockets, if necessary, the guaranty- 
in order that they may have the privilege of making these loans. And 
so long as the Philippine government’s credit stands there will be no 
possibility to get back to the United States Government. 

Mr. Rucker. The credit of that government is likely to stand as 
long as we hold the islands and give them the credit of the United 
States ? 

Mr. Jenks. Yes. 

Mr. Rucker. Therefore this guaranty of 4 per cent offers such 
inducements that there will not be any question about men going in 
there on this sort of a proposition? 

Mr. Jenks. Without a guaranty there have not yet been any 
institutions of that kind coming into the Philippines. 

Mr. Rucker. In only one place in the whole world there is such a 
bank, isn’t there? 

Mr. Jenks. That is hardly accurate. I was speaking of the Eng¬ 
lish colonies in the East. 

Mr. Rucker. Is there an agricultural bank in existence anywhere 
else, with a government guaranty, than in Egypt? 

Mr. Jenks. No; not with a government guaranty. I was speak¬ 
ing of agricultural loan banks, many of which are cooperative. 

Mr. Rucker. I understand. I mean that the one in Egypt is the 
only one with a government guaranty, and we are going to try to 
establish another one with a guaranty. It seems to me that the con¬ 
ditions in the Philippines, after the United States has been running 
the islands for a number of years to give them prosperity, education, 
and intelligence, are not in much better shape than they were before 
we took possession of them. 

Mr. Jenks. The credit of the Philippine government, as we all 
know, is excellent to-day. So is the credit of Egypt, and it was made 
thus by the good administration in Egypt. It is now in excellent con¬ 
dition, but, so far as we can judge, in neither one of these countries 
has capital been ready to make such an investment without a guar¬ 
anty. 

Mr. Rucker. There is no case where a country within its own bor¬ 
ders—not within its provinces or colonies, but within its own coun¬ 
try—has organized such a bank. 

Mr. Jenks. It has not been necessary in advanced countries. 

Mr. Rucker. So that it is proper and right that if we pursue the 
English colonial system we ought to pursue the English colonial 
banking system? 

Mr. Jenks. We ought to adopt some system that will secure the 
establishment of an agricultural bank in the Philippine Islands. It 
seems to me that a guaranty is an essential feature of a successful 
system there. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 351 


LOAN INSTITUTIONS IN EGYPT. 

Mr. Olmsted. What other financial institutions, if any, are now 
or were at the time of the establishment of the agricultural bank 
loaning money in Egypt ? 

Mr. Jenks. I can not answer that to a certainty. 

Mr. Kemmerer. There are four or five others now. There were 
two or three a few years ago, in the nineties; from 1901 to 1906 the 
number increased from 2 to 6. 

Mr. Jenks. My memory of the matter was that in 1898 and 1899 
there were only two small ones, whereas now there are six. In Pro¬ 
fessor Kemmerer’s report I find that between 1901 and 1906 the 
number increased to 6 ; the share and debenture capital and surpluses 
of mortgage banks in Egypt increased from £7,263,000 in 1901 to 
£29,749,000 in 1905.; their liabilities increased during the same pe¬ 
riod from £6,530,000 to £23,403,000 and their assets from £7,744,000 
to £32,655,000. 


LOAN INSTITUTIONS IN THE PHILIPPINES. 

Mr. Olmsted. Can you state what institutions now are loaning 
money in the Philippines ? 

The Chairman. Governor Ide, can you tell that? 

Governor Ide. In the Philippine Islands the only banking insti¬ 
tutions that are there are the Monte Piedad and the Spanish- 
Filipino Bank, whose paid-up capital is a million and a half pesos, 
which does loan on real estate to a considerable degree. 

Secretary Taft. Governor Ide, that is not an agricultural-loan 
bank. Are not most of the loans on business property? 

Governor Ide. They were able to make loans to agriculturists to 
promote the interests of the sugar planters particularly. 

Mr. Olmsted. What rate of interest do they usually charge on 
such loans ? 

Governor Ide. They state that they charge about 8 percent. The 
Hongkong-Shanghai Bank is an English corporation. It has 
branches all over the Orient, and also in London and Hongkong, of 
course. The officers of that bank in the Philippine Islands are not 
allowed to make loans on real estate. There is the chartered Bank 
of England, Australia, and China, which is also a large institution, 
with branches practically all over the Orient. It does not make 
loans on real estate, although it sometimes takes real-estate mortgages 
to secure loans that they have. The only American bank that 
amounts to anything in the islands is the International Banking Cor¬ 
poration, of New York, which is an American institution. The 
charter of that bank is very broad, and it authorizes them to do 
a great many things. The directors may exercise quite substantially 
their discretion in making loans. 

Secretary Taft. They can do anything, in any place, except the 
State in which they have been created. [Laughter.] 

Mr. Olmsted. Do they make loans on agricultural real estate? 

Governor Ide. Very little. The business of exchange, of course, 
was a very large one for all these banks except the Spanish-Filipino 
Bank, that is, foreign exchange; and before we had a gold standard 
the business of local exchange, of trading one kind of money for 


352 HEARINGS BEFORE COMMITTEE ON INSULAE AFFAIES. 

another, was a very profitable branch of business. There is no other 
banking institution, practically, excepting the Monte Piedad, where 
loans are made upon personal security at low rates to poor people, 
so that there are no facilities for obtaining money for the agricul¬ 
turists further than by dealing with large exporting houses, who 
may make advances to them upon their crops, upon terms, of course, 
that are not disadvantageous to the New Tork house. 

Mr. Olmsted. Would not this New York institution lend money 
on real estate if they found it desirable to do so ? 

Governor Ide. The New York institution has branches in Yoko¬ 
hama, and throughout the Orient, and it would be impossible for it 
to tie up all of its capital in loans on real estate in the Philippines. 
They are very cautious in making loans upon real estate. 

Secretary Taft. Some years ago they permanently planted some 
of their capital, did they not? 

Governor Ide. It was stored in warehouses. Several other banks 
made advances upon hemp stored in warehouses, but upon investiga¬ 
tion it was found that there was no hemp there. 

We have a new chattel-mortgage law in the Philippine Islands 
that was passed last summer. I do not know of any other source 
to which agriculturists may look for money except those that I have 
named, aside from the small local usurers, Chinamen, and others 
of that kind, and their dealings would be mainly with the small land- 
owners. 

Secretary Taft. Is it not a fact that money thus loaned on agri¬ 
cultural lands, both by the. International Banking Company and by 
the Spanish-Filipino Bank, hardly exceeds, as Professor Kemmerer 
states, 1^150,000, or $75,000 gold, and that probably that is loaned on 
some large estates to men who are known to the banks as financial 
men in the community? 

Governor Ide. I should say that that is substantially a correct 
statement. 

THE TOBACALERIA. 

Secretary Taft. And that practically, in the Philippine Islands, 
the only bank in the Philippine Islands that lends much money 'on 
agricultural property is the tobacco company, the Tobacaleria, as it 
is called, which does a large business as a factory, and that there is 
really no company which really does the business that it is proposed 
to do, or, possibly, that it is proposed here should be done by the agri¬ 
cultural bank? 

Governor Ide. I intended to include the Tobacaleria Company in 
my remarks as being one of the principal exporters. 

SECURITY ON AGRICULTURAL LANDS IN THE PHILIPPINES. 

Secretary Taft. And these companies sell the crops and charge 
only a nominal rate of interest on the loans. They require a deposit 
of the crops in their warehouse and pay larger commissions by charg¬ 
ing warehouse cost, so that when they get through there is very little 
left the agriculturists. 

Governor Ide. I intended to cover that much more in my state¬ 
ment. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 353 

Mr. Olmsted. Are these loans on which the agriculturists pay 
such exorbitant rates extraordinarily hazardous risks ? 

Governor Ide. I would say that as conditions have been the field 
has been open to capitalists, but they have not come in; and the gen¬ 
eral consensus of capital had been that under the conditions that had 
existed as they had heretofore it was unsafe for capital to invest in 
large amounts on account of this uncertainty of conditions. 

TITLES TO PHILIPPINE LANDS. 

As I undertook to explain in my statement, there have been marked 
changes, one of them that we can obtain safe titles and the other 
that we have a system that acts effectively under somewhat the 
same conditions in Egypt, and that has been working up from small 
beginnings to large ones and has made a demonstration that we have 
never had before; and I am free to say that, as the Secretary of 
War knows, I thought that the government could not have gone into 
this business before these changes, particularly the change that has 
come about in Egypt, applying those conditions in the Philippines. 
I have now changed my opinion, and I think that a well-guarded law 
of this kind would be one of the greatest benefit to the people of the 
Philippine Islands. 

Mr. Olmsted. In your judgment, you think that it would be just 
as conservative as the other banks and would not take hazardous 
risks ? 

Governor Ide. It depends upon what you call 11 hazardous risks.” 
Capital will come wherever it sees a sure and safe return on its 
investment, and the guaranty would insure a return of at least 3 or 
4 per cent. Otherwise capital will not come in. When it comes to 
the question of the actual administration of the bank everything de¬ 
pends upon the conservative care in the way in which the bank is 
conducted. I am of the opinion that no tremendous sums should be 
loaned, but that the example of Egypt should be followed, and only 
modest sums should be loaned. Experiments should be had, and 
there should be an ascertainment of whether the Filipinos should be 
treated in the same way as the peasants of Egypt were with the same 
results. I think that the same system can be followed, and I have 
been in every part of the islands repeatedly, and without any attempt 
to exploit myself I will say that probably there is no one in the States 
now who knows more about the Philippines than I do, because I have 
been there longer thaji has anyone else, and I am ordinarily fairly 
conservative. 

Secretary Taft. You have banked in Vermont, have you not? 

Governor Ide. Well, I have borrowed some there. 

Secretary Taft. Haven’t you been a director in the National Bank 
of Vermont? 

Governor Ide. Yes; ever since I have been in the Philippines and 
some before that time, but I have never directed very much. 

The Chairman. Your idea as to the workings of the proposed 
bank in the Philippines is that the conditions are the same as they 
were in Egypt when the Earl of Cromer broached the subject there. 
There was then no precedent for anything of the kind, and the 
character of the Egyptian peasants was such that he doubted some- 

35815—08-23 


354 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


what whether the plan would be a success. You are convinced that 
it can be made a success in the Philippines, the conditions being prac¬ 
tically the same as they were in Egypt ? 

Governor Ide. I would agree entirely with what Professor Jenks 
says, that it is undesirable to tie this bill up with a large number of 
minute restrictions. The Philippine Commission is on the spot and 
knows the conditions, and also knows the needs of the people. The 
legislation here is not to establish the bank, it is to authorize another 
legislative body to establish it, and the Commission ought to be 
allowed to establish the bank within certain limitations. 

The Chairman. We will suspend at this point, as I see that the hour 
of 12 o’clock has arrived. As I said yesterday, it is exceedingly im 
portant, if any legislation is to be enacted for an agricultural bank 
in the Philippines, that we lose no time in getting at it. I therefore 
wish to conclude the hearings at the earliest possible moment, and also 
to secure such information as is obtainable. We have the witnesses 
here to furnish the desired information, and so I will again request 
the committee to meet promptly at 10 o’clock to-morrow morning. 


Committee on Insular Affairs, 

House of Representatives, 
Thursday, January 10, 1906. 

STATEMENT OF PROFESSOR JENKS—Continued. 

The Chairman. How many visits did you make to the Philippines? 

Mr. Jenks. Two. 

The Chairman. In what capacity? 

Mr. Jenks. The first time I went as a special commissioner of the 
War Department to make investigations in the English and Dutch 
colonies in the Far East for the purpose of reporting to the Philip¬ 
pine government and the Secretary of War on matters connected with 
the Philippines. 

COMMISSION ON INTERNATIONAL EXCHANGE. 

The second time I went as a member of the Commission on Inter¬ 
national Exchange. This Commission, consisting of Mr. H. H. 
Hanna, Mr. Charles A. Conant, and myself, was created by act of Con¬ 
gress on recommendation of the President in response to an invita¬ 
tion of the Governments of Mexico and China, who asked the assist¬ 
ance of the United States in reforming their monetary systems. 
After the work of the Commission in Europe was done, at the sug¬ 
gestion of the other members of the Commission, I was instructed 
by our Government to go to China, as a member of the Commission on 
International Exchange, in order to report to the Chinese Government 
with reference to the work of that Commission in Europe and to give 
any assistance that I might be able to give with reference to a change 
m the Chinese monetary system. At that time the new monetary 
system of the Philippines was being established and there was appar¬ 
ently some trouble in getting the new money into circulation. In 
consequence the Secretary of War, Secretary Root, with the approval 



HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 355 

of Secretary Hay, asked me to go to the Philippine Islands, and on 
that visit I consulted with the Philippine government with reference 
to the monetary system. 

General Edwards. Upon the invitation of the Commission also? 

Mr. Jenks. Yes, sir; of course. 

Mr. Chairman. You and Mr. Conant were really sent as experts 
to consult with the Philippine Commission? 

Mr. Jenks. Yes. Mr. Conant had visited the islands earlier to 
report to the Government with reference to monetary matters from 
the standpoint of the monetary expert and as one who had studied 
conditions in the islands. I reported upon the monetary conditions 
in the other countries mentioned yesterday—India, Java, etc.—and 
indicated the bearing which their experience seemed to have on the 
question in the Philippines. We afterwards worked together in 
recommending the monetary system for the islands. 

The Chairman. Subsequently you were a member of the Commis¬ 
sion on International Exchange and made a report? 

Mr. Jenks. Yes. The Mexican Government was trying to estab¬ 
lish a monetary system on a gold basis and the Chinese Government 
wished to do the same. At the request of those two Governments 
the United States appointed the Commission on International Ex¬ 
change, named a few minutes ago, to do what it could to assist Mexico 
and China in organizing a monetary system. Incidentally we were 
to go to Europe for the purpose of explaining the situation to the 
leading governments of Europe and to do what might be necessary 
to keep the European governments friendly jfcoward any change that 
China might wish to make in regard to the gold standard. At that 
time the Chinese were under obligations to the powers of Europe 
on account of the indemnity for the troubles of 1900, and it was essen¬ 
tial that the powers should not object, if China wished to make a 
change. 

I was appointed afterwards, by order of the President, as the repre¬ 
sentative of the Commission to go to China and make a report to 
the Chinese Government. On that trip I went to the Philippines 
at the request of the Secretary of War, Secretary Root, as I have just 
said. 

The Chairman. That was on the first trip ? 

Mr. Jenks. No; the first time I visited the English and Dutch 
colonies mentioned yesterday, before going to the islands; the second 
time I was sent to China and Japan, and stopped for about a month 
in the Philippines to do the special work mentioned in connection 
with the new monetary system of the islands. 

The Chairman. Now as to the proposed agricultural bank in the 
Philippines; will you resume your statement of yesterday? 

AGRICULTURAL BANK AND SMALL LOANS. 

Mr. Jenks. Three or four matters were brought up yesterday in 
the form of questions that I should like to answer somewhat more 
fully. The question was asked whether this agricultural bank, if 
established, would be willing to make loans to small farmers, or 
whether it would feel that the security was not good enough. I 
think there are several reasons for believing that the bank would be 
willing to make such loans. In the first place it would be established 


356 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


for that purpose. That would be in the line of its business. The 
Commission would insist upon that class of business being done by 
the bank. The Philippine Commission will have a representative 
on the board of directors and the business can be watched all the way 
through. 

In the second place only one-fourth of the money loaned can be 
put out in sums above $2,500, so that three-fourths of the loans must 
be in less sums. It will be the purpose on the part of the government 
to make the loans as small as possible. 

In the third place this bank has obtained its concession along the 
lines suggested and will have the assistance of the government tax 
collectors (the provincial and municipal treasurers) in collecting 
loans and interest, which will give this bank facilities such as no 
private bank or money lenders will have in making or collecting their 
loans. 

BRANCHES OF THE BANK. 

In the fourth place, if this bank starts it will have branches 
throughout the islands, and it will have agents everywhere in the 
islands so that it will meet those needs continually. The situation 
is practically the same as in Egypt, where the bank establishes in 
many places (72 places in 1905) its own representatives; it would 
start in a small way and gradually extend. Its business agents 
would go to the small men and call their attention to the facilities for 
making loans. In this way the bank would extend its business 
where it is safe to extend it. It seems to me that, for those reasons, 
we have no really good ground for doubting that loans would be 
made to the more thrifty people. The small farmer would appreciate 
it and the influence of the bank itself would be good. Of course the 
bank could be depended upon to take care of its own capital and not 
to make loans to the unworthy and dishonest. 

COLLECTION OF LOANS. 

Mr. Rucker. You speak of the government tax collector collecting 
amounts due the bank. Is it contemplated that that is to be a part of 
his official duties to make these collections? 

Mr. Jenks. The thought is that the government will have a gen¬ 
eral supervision of the bank. Besides that its tax collectors at the 
same time that they are doing their regular work could make these 
collections. 

Mr. Rucker. The tax collector would be working for the bank as a 
private person? 

Mr. Jenks. Yes. That would doubtless be specifically provided 
for in the law. 

Mr. Rucker. You spoke of the fact that the bank’s agents would be 
going around interviewing those thrifty classes of small farmers to 
extend loans to them. How many bank agents would be necessary? 

Mr. Jenks. It would depend on the amount of business done. I 
suppose the bank would deem it wise to start in a small way in two 
or three provinces to begin with and gradually extend its business. 

Mr. Rucker. Those bank agents would be salaried men, would 
they not? 

Mr. Jenks. Yes; the leading ones. The others would be paid by 
commissions. In Egypt the bank has to provide them. They have 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 357 

Englishman who speak Egyptian that go about and supervise in 
different parts of the country the native agents of the better type. So 
I should think it could be done in the Philippines. That shows the 
difficulties as well as the desirability of having good intelligence 
and good captial back of the bank. It will at times be found neces¬ 
sary for the bank to use Filipinos, and also to have each one of these 
Filipinos under the direction of an American or an English-speaking 
person familiar with the people and the business who can speak the 
language and get in touch with the people. 

AGGREGATE INDEBTEDNESS IN EGYPT. 

Mr. Rucker. In Egypt, where the bank has been in operation for 
several years, I believe that the reports show that the aggregate 
indebtedness is greater now than when the bank started. 

Mr. Jenks. I think that is true—that a larger number are in debt 
to the bank—but they are more prosperous, with larger incomes than 
before. 

APPOINTMENT OF BANK EMPLOYEES. 

Mr. Rucker. And probably the chief industry would be to get 
people to apply for jobs under that banking institution instead of 
raising corn. 

Mr. Jenks. There is not the slightest ground for thinking that 
there is danger of anything of that kind. A man is not necessarily 
appointed to a position by the bank because he asks for a place. 
After the bank has been established and a place of business arranged 
for, the first thing they do, of course, will be to get some trustworthy 
men and get them to do the work. 

Mr. Rucker. You need not employ everybody that applies, but 
you would employ a great many good men. 

Mr. Jenks. If you take the country as a whole that would be the 
case. The local men would probably only get a commission on work 
actually done. 

Mr. Olmsted. I think that you would find it to be a big expense 
to have a system of banking where you employed agents to solicit 
men to borrow the money and afterwards pay agents to collect the 
principal and interest. 

Mr. Jenks. Of course I assume it will not take too many high- 
priced men. There would not have to be so very many of those. The 
small men are paid commissions. That is why 9 per cent is charged 
in Egypt (earlier 10 per cent, with the commission) and 10 per cent 
is proposed in the Philippines. That is thought to be sufficient. 

Mr. Rucker. Would it not rather give the tax collector and the 
government itself more unpopularity if it were their duty or business 
to do the collecting of principal and interest for loans of the bank? 

Mr. Jenks. That was touched upon yesterday. It is expected that 
the collector will save the bank some expense, but in case of default 
in payment it is not to be the business of the tax collector to push 
those collections. That is referred back to the bank. 

EFFECT ON FILIPINOS OF ESTABLISHMENT OF THE BANK. 

Mr. Gilbert. Would not the establishment of the bank upon the 
principle substantially of the one so successful in Egypt, temporarily 
to help that class of poor people in the Philippines, in the long run 


358 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

have a tendency to perpetuate some of the conditions that have been 
in existence for centuries in China and India, and would it not de¬ 
prive the people of that self-reliance we are trying to bring about ? 

Mr. Jenks. It would seem to us who have considered the matter 
that it would have the opposite effect. It should be kept in mind that 
now the people are quite in the habit of being dependent on the 
usurer in making loans, and the tendency is to rely upon that source 
to a considerable extent. If the bank should encourage these men to 
take up loans made by usurers and to substitute for them loans made 
by this bank, and if the bank should enjoin regular payments, say, 
semiannually, and have its claims presented with regularity for 
payment and then follow this up with persistent pressure, I think 
there is no doubt it would have the opposite effect, and that it would 
breed in the borrowers habits of regularity in their business and in 
that way encourage thrift and better business habits. 

supervision of expenditure of loans. 

Mr. Gilbert. You said yesterday that there would have to be, in 
connection with the bank, some agency to exercise some sort of super¬ 
vision upon the subject of what way loans should be invested. That 
otherwise they would spend their money in a spectacular way or in 
marriage feasts, and that they would not improve their condition. 
Do you not think that the exercise by the bank of such scrutiny over 
the loans would have a tendency to suppress that thrift that we are 
anxious to develop ? 

Mr. Jenks. The agency I had in mind was the bank agent who 
makes the loan. The supervision would be of this nature: These 
farmers and persons making application for loans would be required 
to state the purposes for which they wished the money. No money 
would be advanced to them except for the purposes given. The agent 
would see to it that the money was properly expended. It does not 
follow that because a man is compelled to keep his financial obliga¬ 
tions it tends to suppress his individuality. Here is a reliable, trust¬ 
worthy institution which says, “We are prepared to advance money 
to you on the terms indicated if you agree to use it in the way we 
suggest.” They will see to it that he lives up to his contract. That 
is all. 

ECONOMY AND ENTERPRISE DEVELOPED BY BANK. 

Mr. Gilbert. You think it would develop economy and enterprise? 

Mr. Jenks. Yes; instead of begetting bad habits. That has been 
found to be the effect of these minor loans. . 

Mr. Rucker. These agents, as we designate them, you said a mo¬ 
ment ago, would be paid a commission of a cent and a half on the 
dollar. 

Mr. Jenks. Yes; one or, at the outside, one and one-half per cent. 

Mr. Rucker. And they are to go about soliciting loans? 

Mr. Jenks. Yes; the smaller men would doubtless suggest the 
bank as a good place to get loans. 

Mr. Rucker. Then there would be other men who would see about 
investments ? 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 359 
RESTRICTION ON LOANS BY THE BANK. 

Mr. Jenks. Presumably it would come to be so in the course of 
time, the more responsible agents who investigated the credit of 
the borrower would, I should suppose, generally have charge of that 
part of the work. & 

Mr. Rucker. In a financial institution, doing business of making 
loans recommended by an agent, whose pay depends on the amount of 
loans made, would not the tendency be to loan more than was pru¬ 
dent ? 

j Mr.^ Parsons. Is the commission paid for making or collecting 

Mr. Jenks. For making loans the local agent is paid a commission 
of 1 per cent. The collector is also paid a commission for collecting. 
That tendency would be dangerous if they were not to be supervised. 
The business is similar in operation to the business of life insurance, 
where the company pays a commission on the premium to the agent 
who solicits the business, but the insurance company will not put into 
effect a new risk without the supervision of other officers. Likewise 
the bank will have trustworthy officers to supervise these loans. 

POSSIBLE BAD EFFECTS OF ESTABLISHMENT OF BANK. 

Mr. Garrett. As I understand it, from the report of Mr. Kem- 
merer, this proposition as a governmental undertaking is twofold; 
it would beget in the minds of the people the idea that it was pater¬ 
nalism, and secondly, it would create dissension when it was attempted 
to collect private debts by government agents. It would be violative 
of those two cardinal principles. If we delegate to private parties 
the power to lend this money, but empower our own agents to collect 
it through our tax collectors, it would touch the people at a vital 
point and might hurt. In other words, have those people intelligence 
enough to distinguish between the power of the tax collector as a 
public official and as a private representative of the bank, and will 
it not beget some opposition to the government if we give this power 
to tax collectors ? 

COLLECTION OF LOANS. 

Mr. Jenks. I think the question is a very pertinent one. It seems 
to me, however, that there would not be any very serious danger 
along that line, for .this reason; the tax collector presents the claim 
and he makes it convenient for the borrower, as well as for the bank, 
to pay this money regularly at these times; but in case there is a 
default and the man does not pay, it is not the tax collector who 
pushes the claim; it is the bank itself which pushes it. On the other 
hand, in the case of the taxes, where the collector is a representative 
of the government, the tax collector pushes the claim. I think that 
there would be little likelihood of the borrower making a mistake of 
the kind suggested. 

You speak of the objection to the collector doing the work sug¬ 
gested because of the odium that it would bring upon the govern¬ 
ment. I think perhaps the chief way in which hostility would be 


360 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


aroused would be this: Whenever a man makes an application for a 
loan, it is of course necessary that his financial condition—the way in 
which he has been in the habit of spending his money, his personal 
character, and everything of that kind—be investigated with great 
care. It is this prying into personal affairs that is annoying. All 
that kind of work would be done by the bank. If it were a govern¬ 
ment agent who was making the investigation it would be felt, 
doubtless, as in the case of some of our income-tax propositons, that 
the government was interfering in private affairs; whereas if we 
ourselves go to a bank to borrow money it is the bank that is taking 
the risk and we expect ourselves to be investigated as regards pur 
qualifications, personal character, etc. Likewise in the case before us, 
an investigation on the part of a government official would be re¬ 
sented, but the investigation would be made by a bank official, and 
every one of course would feel that such an investigation was a proper 
thing for a private individual or for a corporation taking the risk. 

Mr. Garrett. Do you think that with the intimate connection that 
will be established between the bank and the government the people 
will distinguish very carefully? 

NO ODIUM ON GOVERNMENT FROM COLLECTION OF LOANS. 

Mr. Jenks. In my judgment, the intimacy between the two is not 
great enough for the government to get any of the odium from it. 
In the first place, we do not ourselves believe, and no one would, that 
the government is going too far when it grants a franchise to a cor¬ 
poration or to such corporation to be formed, and that is what the 
government is doing here. It is simply granting a concession, to 
begin with. 

Mr. Garrett. We understand that perfectly; but I am asking you 
from the standpoint of the intelligence of the Filipinos what they 
would think of it. 

Mr. Jenks. So far as the native Filipino is concerned, in the 
granting of a concession he understands nothing whatever about 
it. He does not care whether it is a private corporation or a private 
individual from whom he can borrow. He would not go so far as 
to ask what right they had to loan the money, and the government, 
therefore, would.not appear in the transaction at all. The only 
connection in which the government would appear would be when 
the claim of interest or principal would be presented by the govern¬ 
ment’s collector acting for the bank. That would be the only con¬ 
nection in which the government would figure in the transaction. 
At the point of greatest difficulty, when the man’s private affairs 
are being investigated, the government would not figure, nor would 
it appear in the forcible collection of the loan upon default. 

USURY LAWS NOT NEEDED. 

Mr. Webber. As I understand it, there are no laws against the 
exaction of the usurer? 

Mr. Jenks. There are no usury laws in the Philippines at the 
present time, I believe. 

Mr. Webber. And this bill is to take the masses out of the hands 
of the extortioner and the usurer, and to put them into the hands of 
those who will lend them money at a reasonable rate? 



HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 3(31 

Mr. Jenks. That would be one very important reason for the 
establishment of the bank, and, in my judgment, would be a much 
more effective way than any possible usury law. 

BONDING OF COLLECTORS. 

■ ’Mr. Rucker. These tax collectors are elected or appointed, and, 
I suppose, like all officers intrusted with the collection of public 
funds, are under bonds. Would their bondsmen be responsible for 
misappropriation of collections made by themi They would collect 
large sums of money. 

Mr. Jenks. Provision on that point would be especiallv made by 
the Philippine government. 

Mr. Rucker. And without being chosen by the bank, as I under¬ 
stand the case, the collector who would go around and get the money 
would be the agent of the government in the particular district or 
province. Is there a provision as to this in the bill? 

Governor Ide. This is only a suggestion, but I wish to say that it 
is very unsafe to undertake to argue from the special draft of the 
bill. This bill has not been considered by the Philippine Commis¬ 
sion or by any other authorities of the Philippine government except 
Mr. Kemmerer. I do not know what the provision is here with 
respect to the matter in question, but I know perfectly well that the 
bonds of the collectors—and the municipal treasurers would be the 
collectors—would require them to be responsible for the moneys 
collected for the bank. I supposed that it was in this draft of the 
bill. 

Mr. Rucker. I do not know whether it is in the bill or not. 

Governor Ide. I am very sure that it will be when the law is 
passed. There will be a provision in it making the treasurers respon¬ 
sible for the money collected under the bonds given for them by the 
bonding companies, which are under contract for two or three years, 
so that there will be no difficulty about that subject. 

Mr. Rucker. As I understand you, Governor, the draft of the bill 
before the committee has not met with the approval of the Philippine 
Commission. 

Governor Ide. The recommendation of the Philippine government 
is contained in their report here, and that is that the Philippine gov¬ 
ernment be authorized by act of Congress to pass a law with certain 
limitations that are laid down there. My opinion, if I might be* 
allowed to express it strongly, is that it would be exceedingly unde¬ 
sirable to pass a law here as to the details of which the Filipinos have 
had no opportunity to express an opinion. In the Philippines some 
member prepares a bill; it is then perfected as far as possible by the 
Commission, and then they advertise a public meeting for its dis¬ 
cussion, and the Filipinos come in and express their views as to the 
proposed measure, and the bill is then amended after it has been fully 
discussed in this way. It is a very common thing there for the Com¬ 
mission to get the opinion of prominent business men, native Fili¬ 
pinos, and Spaniards who have been in the islands for a long time, 
and then reshape the bill according to the ideas thus obtained. 

As far as the bill under discussion is concerned, I would not stand 
for all of the provisions in the present draft. It is undoubtedly a 
good draft and a good working basis with which to start, but I think 


362 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

that the proposed legislation should be within the general line of 
authorizing the Philippine Commission to establish the bank, with 
certain limitations as to its capital, as to the rates of interest to be 
charged, as to rate of the guaranty, and lea ve the details to be worked 
out by those on the spot. I might say in this connection that every 
member of the Philippine Commission is in favor of this general 
class of legislation. They are on the spot. The Secretary of War 
is strongly in favor of it, as is also the Chief of the Bureau of Insular 
Affairs. All who are familiar with the affairs in the islands are 
thoroughly and strenuously in favor of legislation of this general 
character because of the vast good that really could come from it. 

DEMAND OF FILIPINOS FOR AGRICULTURAL BANK. 

Mr. Parsons. How do the Filipinos themselves regard it? 

Governor Ide. It has been their crying need from the time that I 
first went to the Philippine Islands until to-day. I have never been 
in a province in the islands when the municipal and provincial offi¬ 
cials have been gathered together where the first thing that they 
have presented to my attention was not the .need for an agricultural 
bank. The difficulty is not so much with the usurious charges in 
rates on loans, it is that the money is not there. The country is 
poor. We want to devise some system for getting money into the 
islands from the outside, and this apparently is the most feasible 
proposition for that purpose that the .world’s experience has demon¬ 
strated. 

We had a convention in last July of the agriculturists of the 
islands at Manila, and a unanimous resolution was adopted by those 
representatives there with a provision therein that we should use our 
utmost strenuous efforts to get this legislation. 

Colonel Edwards. This and the tariff. 

Governor Ide. Yes; the.two things. But this is really the thing 
that comes nearer to the comprehension of the people—the chance to 
get some seed and modern agricultural implements and buy more 
land and have homes that they can call their own. 

THE MONTE PIED AD. 

Yesterday I referred to the Monte Piedad. Now, that is a govern¬ 
ment institution, in a sense. The Spanish Government chartered it 
and aided it, giving it a considerable sum of money at one time. I 
am not sure whether it was money that belonged to the government; 
that is very doubtful; but they gave it money, and the church or¬ 
ganization furnished it a great amount of money, also. It is under 
strict supervision. I have not them here, but I have reports in re¬ 
gard to the operations of this institution. The Monte Piedad lends 
money on personal property, and the reports show that over 85 per 
cent of the property pledged is redeemed within the time limit. 
About 95 per cent has been redeemed ultimately, but the sales of the 
unredeemed property on the average have furnished a considerable 
sum above the j mount of the loans to be paid back to the borrowers. 
It is evident from this that when the Filipino finds that his own 
property is bound by the payment of the debt he is anxious to save 
his property and to fulfill his obligation. That institution is quite 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 363 

a charitable one, I think we might term it, because the rates on the 
loans are very low. The purpose is to allow the poor people on 
pledges ot clothing, jewelry, or household furniture to obtain a little 
money tor their temporary needs at a low rate of interest. The rate 
ot interest is also lower than is proposed here. 

This bank is proposed to accomplish some of the same benefits for 
the agriculturists that the Monte Piedad accomplishes for another 
class of poor people. 

COLLECTION OF LOANS. 

Mr. Rucker. The Philippine government, then, would see to it 
that by law it would have an opportunitv to collect the monev due 
this bank. 

Governor Ide. To collect it so far as it could. Its agents would 
collect it without force. The collector would be the receiver for the 
money. 

Mr. Rucker. In that way you would by law create from year to 
year and from term to term agents of the bank, but nobody would 
know in advance who would be the agents of the bank until their 
election or appointment. 

Governor Ide. These are agents of the bank in the sense that 
they are the people who receive the money and hand it over to the 
bank, and the auditing system in the islands is such that auditing 
is very frequent by means of traveling auditors. The collectors 
would be responsible for this money. 

Mr. Garrett. You have nothing in the Philippine Islands analo¬ 
gous to our free-seed distribution, I suppose? [Laughter.] 

Governor Ide. No; not exactly analogous. We have agricultural 
experiment stations. 

Mr. Garrett. As I understood you to say a moment ago, many of 
the small agriculturists need small loans for the purpose of buying 
seed, etc. 

SCARCITY OF MONEY IN THE PHILIPPINES. 

Governor Ide. The need of money by the small agriculturists is 
almost indescribable. The country is poor and the people are poor, 
and I do not know of any method by which they can become prosper¬ 
ous until they have the means to cultivate their lands and to acquire 
much more land. There are millions of acres that are unscratched 
and untouched, perfectly available. They can not buy any additional 
land because they have not the necessary money. They can not buy 
improved machinery because they have not got the money. 

Mr. Olmsted. Could not the government sell them those lands on 
favorable terms? 

Governor Ide. The government would sell the lands on favorable 
terms, but the people have no money at all for purchasing the land 
even on easy terms. 

The Chairman. They would have to borrow money of the usurers 
to get it. 

Governor Ide. The land must be paid for just the same even though 
it be bought from the government. 

Mr. Rucker. This has been the perplexing thought with me. The 
people of the Philippines are poor, thriftless, and prodigal in some 
respects, and they have to pay enormous rates of interest on their 


864 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

loans that we have heard described here, 20, 30, 40, 50 per cent, and 
sometimes as high as 100 per cent. How do they survive from year 
to year? How do they get the money to pay back their debts? 

Governor Ide. I suppose that if you could get the average amount 
of all their debts it would be a pitifully small sum, but, at the same 
time, to a man who owes $10 and has but $1, the hardship is just as 
great, and he is just as much subject to the oppression of the usurer 
as though the amount of his debt was much greater. The difficulty 
is that there is not enough money in the islands. 

Mr. Rucker. The situation, then, is this: You have those people 
there owing small sums of $10, and they think that they can escape 
the losing of their farms if they can get the money to pay off these 
$10 debts? 

Governor Ide. Very often he does not. But in other cases he 
would pay some more interest and be under the harrow of the usurer 
during all of his lifetime. 

Mr. Rucker. It is only a matter of time when the man would go to 
the wall? 

Governor Ide. They do go to the wall, very many of them. They 
are exceedingly poor. 

EFFECT OF LOANS ON AGRICULTURE. 

Mr. Olmsted. Would the advancement of these moneys tend to 
increase the volume of agricultural products in the islands? 

Governor Ide. Oh, yes; I think very largely. 

Mr. Olmsted. But is there a market? Where would be the mar¬ 
ket for their increased agricultural products? 

rj MARKETS FOR PHILIPPINE PRODUCTS. 

Governor Ide. The market for hemp in England and the United 
States is immense. Copra is sold in Hamburg, Marseille, London, 
and the United States. There is, of course, a world market for 
sugar, except as to the United States, and the markets for tobacco 
are all open to them on some terms, except that of the United States, 
so that the markets are large enough, and nearly all of the products 
that the Filipino raises, except those necessary for his immediate con¬ 
sumption, are such that there is a great market for them throughout 1 
the world. They exported last year, trusting to my memory, about 
$22,000,000 worth of hemp. The local market for rice is very great, 
much beyond present production. 

Mr. Page. Did I understand you to say that the markets of the 
world are open without tariff duties to Philippine products, except 
the United States on sugar and tobacco? 

Governor Ide. No; I would not say it as broadly as that, but the 
markets of the United States are prohibitory; but I do not know of 
any other countries where they are. 

Mr. Page. Other countries are not? 

Governor Ide. I do not know of any others. 

DEMAND FOR AGRICULTURAL BANK. 

In regard to this agricultural-bank proposition, perhaps I might 
be permitted to state that during the month of October last the gov¬ 
ernor-general and some of the other members of the Commission 



HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 365 

made a trip through the southern provinces, and the places for the 
meetings were arranged beforehand, and the principales, the presi- 
dentes, and the members of the municipal councils were mainly gath¬ 
ered there, so that the meetings for the welcoming of the governor- 
general and the members of the Commission were representative 
gatherings. I have copies of the Philippine papers giving accounts 
of those meetings, containing telegrams from Governor-General 
Smith to Manila, and they are, of course, authentic, and they say that 
there was not a single place at Which the party held meetings but 
that the two things presented were the tariff proposition and the 
agricultural bank. The agricultural bank is a proposition that 
reaches the comprehension of the ordinary man more than the tariff 
proposition. 

The Chairman. In that connection I wish to say that when the 
Taft party was in the Philippines that was the one subject, next to 
the tariff, that was constantly broached—the subject of the agricul¬ 
tural bank—wherever we went. 

METHODS OF USURERS IN THE PHILIPPINES. 


There was a prominent business man in Manila who said that the 
people in the provinces are taught business in this way. The usurers 
Keep the rate of interest up in their discretion, and then they make 
such terms of adjustment and appraisement in the payment of the 
loans—reduction or increase, as suited them—that, in effect, they sim¬ 
ply keep the landowner at work for them on the terms of the usurers. 
The usurer could not get another man to take the man’s place and so 
he did not foreclose, but he just kept on making demands, and he 
got all that the poor man had and kept him practically a slave at his 
command. 

Governor Ide. That is worked out also in another method. They 
have a system of making loans that would be payable in a series of 
years by annuities, making the rate of interest very moderate and 
reasonable. For instance, if $100 were loaned to be paid back in five 
equal annual installments at 6 per cent interest, the borrower would 
be informed at the end of one year that he would have to pay back 
$20 and $6 interest. At the end of the next year he pays another 
$20 and $6 interest, and so he continues paying that sum for the next 
five years, and in this way he is paying $6 interest the last year for 
the use of the $20. The usurers are very ingenious in satisfying 
the borrowers that the terms are generous, making it appear that the 
borrower can extricate himself by the payment of a comparatively 
small amount of interest each year. 

Mr. Webber. The usurer works him for all he is worth. 

USURY LAW NOT DESIRABLE. 

Mr. Gilbert. Would a usurer be suppressed for charging excessive 
rates of interest when they are figured mathematically? Is there 
any such regulation as that in the islands? 

Governor Ide. There is none. There is probably not a twentieth 
part of the money in the islands that is needed there, and I doubt 
whether we could get very much ahead by putting a man in prison 
who undertakes to take some advantage of the law of supply and 


366 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

demand. That is the whole question, of course, everywhere. But 
in the Philippines, I think, with the tremendously small supply of 
money that we have and the resources that are available, that it is 
not well to strangle such producers as we have by legislation. I sup¬ 
pose that here in the city of Washington—I do not know—you allow 
your pawnbrokers to take almost any rate of interest, and it is so 
in other cities, but that is on the basis that the loans are hazardous 
and a good deal of a risk, and the same is true in the Philippines. 

Mr. Hubbard. To drive out the usurer would add to the difficulty. 
It would not be wise to drive out the people who have the money and 
who are willing to supply the deficiency. 

Governor Ide. There is a legal rate for loans on produce, by con¬ 
tract, and that is a reasonable rate. 

The Chairman. Professor, have you anything additional to say? 

Mr. Jenks. I would like to answer in another way the question 
that was propounded when Governor Ide spoke. 

I would like to say that the draft of the bill prepared for the 
Philippine government was merely submitted here in the hope that it 
might be used as a sort of basis on which to work. The Philippine 
government would pass the law in the form that seemed to it wise. 


COLLECTORS OF LOANS. 


But as regards these government collectors, I would like to quote 
from the draft of the bill, as follows: 

'A The Philippine Agricultural Bank shall be permitted, on the approval in each 
instance of the treasurer of the Philippine Islands, to utilize the services of any of 
the provincial treasurers of the Philippine Islands and any of the municipal treasurers 
in their capacity as deputies of the provincial treasurers of their respective provinces, 
in so far as such services shall not conflict with the efficient performance of the official 
duties of said provincial and municipal treasurers. 

There is no compulsion whatever on the part of the bank to take 
these services of the tax collectors. They are simply permitted to 
utilize them if they can make better arrangements with them than 
with other persons. 

Further on the bill says: 

Provincial treasurers, in making collections as above provided, shall be respon¬ 
sible directly to the bank. 

In that respect they are not acting as government officials, but as 
agents of the bank. Again the bill reads: 

All accounts and records of transactions, either directly or indirectly pertaining 
to the affairs of the Philippine agricultural bank, shall be kept entirely separate and 
distinct from the official accounts and records of the various provincial and municipal 
treasurers, and all funds belonging to said bank shall be kept entirely separate from 
the municipal, provincial, and insular funds held by said treasurers, and shall be 
labeled as such. 

And so it is simply a permission on the part of the government to 
the collector to act in this way. 

Mr. Rucker. Does that have any reference to the office of collector? 

Mr. Jenks. Yes, sir. The provincial and municipal treasurers 
mentioned in the bill are the tax collectors. 

Mr. Rucker. I understood that it was the purpose of the law 
passed here to make the collectors personal representatives of 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 3G7 

LOANS SHOULD BE MADE TO SMALL AGRICULTURISTS. 

. Another reason why these loans would go to the small agricultur¬ 
ists is that a very large percentage of the lands are very small hold¬ 
ings. All of the agricultural land except 4.8 per cent is held by 
men who have less than 5 hectares, about 12^ acres. And, for that 
matter, over 35 per cent of the entire holdings are very small, not 
over thirty-five one-hundredths of a hectare, or about 194 feet square, 
f his of course is a small patch of land. 

Mr. Gilbert. You do not mean that those are agricultural holdings'? 

Mr. Jenks. Yes; agricultural holdings. 

Mr. Gilbert. What do they cultivate on that 194 feet square? 

Mr. Jenks. They can cultivate a little hemp, a little rice; and 
where they are near the villages they can raise vegetables, etc., for 
sale in the villages. 

desirability of having private collectors. 

♦ 

Mr. Garrett. Inasmuch as the collection of a debt is much more 
vital in its effect upon the sentiment of the man from whom it is 
collected, would it not be better if government agents are to be con¬ 
nected with this matter to turn the thing around and let the govern¬ 
ment agents advertise the benefits of the loan and let private indi¬ 
viduals do the collecting? 

Mr. Jenks. They will do that more or less, too. But it should be 
kept in mind again, as Governor Ide has suggested, that the govern¬ 
ment officials will not use any pressure in the collection of the loans. 

the government guaranty. 

I want to call attention again to the guaranty that was spoken of 
yesterday. It is a much less risk, in the first place, for an investor to 
put money into the bank than into railways in the Philippines, and 
a much less risk for the government to guarantee interest on the in¬ 
vestment of the bank than in the case of a railway. This is true for 
two reasons: First, where the money is invested in a railroad very 
large sums are put into the form of fixed capital at once—into roadbed 
and rails and stations. If the railroad is not a success the money is 
practically lost. In the case of a bank the money can be first invested 
in a small way; if it is found that it is not a success, the bank will 
suspend before a very great amount of money is sunk; and, secondly, 
it should be remembered that the government does not guarantee 
the capital of the bank; it simply guarantees the interest, and the 
business will be stopped in time to prevent any particular loss. 
We may properly note, also, the fact that the passage of this bill 
could not affect unfavorably any interest in the United States, 
while if the bank proves a success, as seems probable, it will add 
greatly to the prosperity of the Philippines and will thus indirectly 
aid the United States. The Philippine people simply ask Congress, 
without risking in any way any interest of the United States, to 
permit them to guarantee at their own risk the interest of this bank, 
which they think will relieve many of their difficulties. They take 
whatever risk there is. They surely ought to be given this privilege. 
I think that there are a number of others here who ought to be heard. 


368 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

I will therefore pass over the other points that I had intended to touch 
upon, and will conclude unless there are some questions that the mem¬ 
bers of the committee may wish to ask me. 

EXPENSES OF EGYPTIAN BANK. 

The Chairman. Doctor Kemmerer, there is one question I want to 
ask you in connection with your statement. I then want to put on 
a business man from the Philippines, Mr.. Lowenstein, for a state¬ 
ment. 

In the matter of these collections, I find in your report, on page 20, 
a statement that the salary list of the bank of Egypt is about £2,000 
a month, which is approximately $10,000; the office expenses £1,000 
a month, which is another $5,000. Well, now, twelve times $15,000 
would be $180,000. This, with the agents in the field, of which there 
are 22, would make the expense over there about $200,000 a year. In 
a bank with $35,000,000 of loans out, have you figured out what per¬ 
centage of expense that is to the money loaned? 

Mr. Kemmerer. I should say that that is from five-tenths of 1 
per cent to six-tenths of 1 per cent on the loans. 

PROBABLE EXPENSE OF CONDUCTING PHILIPPINE BANK. 

The Chairman. Do you think that the business could be conducted 
on such economical lines, on the same expenses, in the Philippines ? 

Mr. Kemmerer. I should say that as the business increases the 
relative expenses would naturally decline—that is, a concern of 
this kind would have a larger relative percentage of expense when it 
was small than when it had grown larger—and I should say, also, 
that it is improbable that the expense in the Philippines would be 
reduced to the low level that it has been in Egypt, because Egypt is 
comparatively a compact country, with the agricultural lands cover¬ 
ing a territory of about 13,000 square miles, say, right along the 
Nile Valley and Delta, while in the Philippines the agricultural 
land is more scattered and there would be heavier expenses of ad¬ 
ministration for that reason. I should say that the Egyptian ex¬ 
penses would not be representative in that regard. They would be 
greater in the Philippines, probably. 

The Chairman. The expense would have to be a great deal more 
to jeopardize the bank? 

Mr. Kemmerer. I should say so; yet the hank proposed for the 
Philippines would receive a rate of 1 per cent more interest than the 
Egyptian bank receives, and I should say that that 1 per cent addi¬ 
tional would more than cover the extra expense. 

STATEMENT OF HON. WILLIAM H. TAFT—Continued. 

Secretary Taft. Mr. Chairman, will you let me say' now what I 
have to say in advance of Mr. Lowenstein, as my time is now very 
greatly taken up and I am anxious to leave as soon as possible ? 

The Chairman. I wanted you for the peroration. 

Secretary Taft. I would not be able to give a peroration. [Laugh¬ 
ter.] 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 369 

There are only one or two general observations that I would like to 
make with reference to this proposed legislation. The first is a mere 
iteration of what the chairman was saying just as I came into the 
room, with reference to the feeling of the Filipinos in respect to the 
agricultural bank. 

FEELING OF FILIPINOS AS TO AGRICULTURAL BANK. 

Going back to 1900, when we first went to the islands, down to the 
present time no public gathering of any sort, with reference to the 
economic or political improvement of the islands, is ever held in the 
islands that emphasis is not put on the importance of an agricultural 
bank in the islands, and the government was urged from the begin¬ 
ning to organize such a bank. 

DIFFICULTY IN SECURING INVESTMENT OF PRIVATE CAPITAL. ‘ 

It was pointed out by gentlemen who were familiar with the his¬ 
tory of the islands and who resorted to argument which is common in 
such a case, and which under different conditions would have been 
very forceful, that under the Spanish Government, it was entirely 
possible, and that therefore under the present law it would be pos¬ 
sible if the Spanish law of corporations can be said still to continue in 
the islands, to organize an agricultural bank on a private basis and 
carry on the business which we seek to carry on under this proposed 
bill. But those who are at all familiar with the conditions in the 
Philippines, or, indeed, with conditions in any country that is going 
through a transition—that is, remote from the centers of capital— 
will realize that there are certain classes of business, and, indeed, 
most businesses, that are difficult to start on a private basis because of 
the natural timidity that capital has in going into remote places 

We have had such an experience with respect to the Philippine rail¬ 
roads that is most significant. We did succeed in securing a com¬ 
pany, and a responsible company, to undertake the construction of 
400-odd miles in Luzon without a guaranty, but there were 300 miles 
in other parts of the islands that we had to guarantee. In other 
words, the necessity for Government intervention in a case like this 
is to prove to capital, that we hope will subsequently come in without 
such aid, that it is possible there under the conditions that exist to 
invest capital with the reasonable hope of getting good interest and 
of getting a return of the capital. It is to make the initiative, it is 
to stir up those who have capital to understand that they can make 
a good profit and a good return without loss of their capital. Now, 
of course, it is not necessary to say that this is ^specially true of the 
making of these small loans to the small farmers who borrow them 
and have of course less security to offer than persons who own large 
plantations. 

DISCRIMINATION IN INTEREST CHARGES. 

Something was said yesterday about maintaining the rate of inter¬ 
est unimpaired. I am afraid that an original provision of that sort 
would interfere with the usefulness of the bank. I think that a 
limitation might be placed upon the interest to be charged and that it 

35815—08-24 


370 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

ought to be placed, and even as between small farmers. One small 
farmer has borrowed money and has shown that he is industrious, 
that he takes care of his cattle, that he husbands his resources, and 
pays his debts on the dot, and he may very well ask from those to 
whom he has proven his industry and his providence that he shall 
have a less rate of interest than another farmer who is negligent and 
not industrious, and a loan to whom must necessarily involve more 
risk. This is ordinary banking. It is discrimination, but you have 
got to have discrimination anywhere with reference to individuals 
and with reference to security. 

The Chairman. In that connection I call your attention to the 
fact that Lord Cromer, who made such a wonderful success in 
Egypt, had the interest fixed at 9 per cent first for all borrowers, 
large and small, and then had it reduced to 8 per cent for all bor¬ 
rowers, large and small, the idea being that it was so much less than 
the 20, 30, 40, 50, or even higher per cent that the people had pre¬ 
viously been paying that they would all borrow from the bank. 

Secretary Taft. In other words, that you make it so beneficial for 
all that it is as low a rate as the best security ought to get. 

Mr. Olmsted. It might be beneficial to the borrower, but it would 
compel the bank to loan at a low ^ate on a great risk. 

EGYPT AS A PRECEDENT. 

Secretary Taft. We ought to be frank in discussing this matter, 
and look forward with as much clearness as we can command with 
reference to the operation of this law. Possibly Mr. Kemmerer has 
already commented on the differences in conditions between the Fili¬ 
pinos and the Egyptians. And a great difference, in my mind, and 
a doubt that arises as to the successful operation of this act grow out 
of the difference in the conditions of agriculture in that valley of the 
Nile, in which all crops are raised by irrigation and are therefore 
necessarily constant, while in the Philippines most of the crops are 
not raised by irrigation, but are more or less affected by the variations 
in climatic conditions from one year to another. 

But, in spite of that, I think that the experiment in Egypt, if you 
will examine it, shows, because of the resemblance of the people to 
the Filipinos, the possibility that this act will work out to great 
benefit. I think that the importance of the proposition from a sen¬ 
timental standpoint—and that is something that is not to be ignored 
in this matter—that the importance of it and of its success, if we can 
accomplish it, is worth the $200,000 a year that would be involved if 
everything was lost to the Government. I would not make it more 
than $200,000 a year until it proves itself to be a success, and then, I 
fancy that if it does prove to be successful, there will be no difficulty 
in coming to Congress and securing authority to increase the capital, 
if that be necessary. What we are very hopeful of is, that should it 
be a success, it will have the same influence upon the investment of 
private capital there without a guaranty that this bank in Egypt 
seems to have had on private capital in that country. 

ADVANTAGE OF GOVERNMENT AGENTS. 

The advantage of our government officials acting as part of the 
agency of the bank is, first, that their services can therefore be com- 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 371 

manded at a much less rate than if independent agents were sen^ 
out , and, second, that in a country like that, which—and we do not 
realize how great the influence is—in a country like that the official 
character or the man who collects the money adds greatly to his in¬ 
fluence on the debtors to secure promptness in payment, because 
they respect him and they fear his power, and they are apt to act 
with a great deal more promptitude and more respect for his de¬ 
mands. 

Mr. Smith. With reference to the agents of the government acting 
as agents of the bank, the officials of the government acting as col¬ 
lectors for the bank, the fact that they are collectors would probably 
make them far more efficient, would it not, to secure for the bank 
responsible borrowers than if the bank were compelled to select its 
collectors from outsiders who might not be so familiar with the 
people as would be the government collector? 

Secretary Taft. Yes, sir; that is quite true. Of course the govern¬ 
ment collectors collect taxes from everybody in the province, and they 
are necessarily familiar, therefore, with the character of their pay¬ 
ments, as to whether they are prompt or not, and as to exercise 
of authority that they have to exert to insist upon prompt pay¬ 
ment. They can not but be advised as to the conditions and habits 
of their borrowers. 


INITIAL CAPITAL OF BANK. 

Governor Ide. In this bill there is a provision that the bank shall 
not commence business until the $500,000 gold has been paid in. 
Do you think that capital of that amount would be sure to come in 
before any experiment has been tried, or would it not be better to 
leave the Philippine Commission to decide the amount that must 
be paid in. They are dealing with their own matter, and the. re¬ 
quirement that that amount of gold must be paid in before the bank 
can do any business at all ought to be left to the judgment of the 
Commission. It is my idea whether it would not be better to leave 
that with the Commission than to tie it up here. 

Secretary Taft. As far as the committee is to go in recommending 
legislation, I think it is best ‘to leave it, as far as possible, to the 
Commission to do this, as they are more familiar with the conditions 
in the islands than Congress can be. I am not sufficiently advised— 
let me see, that would be 10 per cent of the capital of the bank. I 
confess that I do not think that would be unreasonable, and I think 
that, according to Vermont methods, they would require all that. 

Governor Ide. Yes; that would be true if they were dealing with 
other people’s money, but in Egypt they commenced with £10,000, 
and it is possible that in the Philippines it would be better to select 
a very small area. 

Secretary Taft. Of course the guaranty would increase propor¬ 
tionately as the money is paid in. That is a detail with respect to 
which I should prefer to leave it to Judge Ide, for my experience in 
the four years that I have been in the islands with Judge Ide was 
that when he was on the less conservative side I always yielded to 
him. [Laughter.] 

Mr. Jones. We have no bill pending here now. 

Secretary Taft. Oh, I thought there was a bill pending. 


372 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Jones. I did not know that there had been a bill introduced. 
On the subject of the recommendations of Doctor Kemmerer, what 
I wanted to ask you was whether you thought that we ought to enact 
a law going into and defining the various provisions and details of 
legislation upon this subject, or whether we should simply pass a 
general measure empowering the Philippine government to enact this 
legislation, and provide what the limit of guaranty should be, what 
the rate of interest should be, and other general provisions like that, 
but leave to the Philippine Commission the power and authority to 
work out the details? 

Secretary Taft. I am bound to say that I think that that would 
be the better form of legislation. Of course, Congress naturally feels 
there ought to be some limitations with respect to the amount of 
the guaranty, and the amount that ought to be involved, but with 
the Commission on the ground I feel sure, knowing the Commission 
as I do, that they will be exceedingly conservative in the establish¬ 
ment of a bank of this character. A bill has been prepared by Mr. 
Kemmerer, General Edwards, and Professor Jenks, which modifies 
the bill which has been introduced so as to point out the character 
of the legislation that the Commission ought to enact, without saying 
what that legislation shall be, saying that it should enact legislation 
on various subjects, but without determining just what the pro¬ 
visions shall be with reference to those loans, and it seems to me 
that that would be a very much better form of bill than to make 
narrow and rigid the limitations in this bill. 

Mr. Jones. Not to undertake to enact details that we can not pos¬ 
sibly know about here. 

I have not read this measure, but I think that it ought to be as 
clear a bill and as concise as possible, leaving the details to the Philip¬ 
pine government. That is my idea as at present advised about it. 

Secretary Taft. If you will remember that is the character of the 
railroad bill that was passed, and that bill has worked fairly well. 

alleged rights of spanish-filipino bank. 

Mr. Garrett. To-day, after I was assigned to this committee, I 
received what I presume the other members received earlier, that is, 
a book from the Spanish-Filipino Bank, indicating that they were 
very strongly of the opinion that they had some reserved rights. 
Is there any probability that after the passage of this bill the pro¬ 
posed bank would come into conflict with the Spanish-Filipino 
Bank? F ^ 

Secretary Taft. No, sir. The Spanish-Filipino Bank under a 
grant of the Government of Spain—and Governor Ide can correct 
me if I do not speak exactly—had the right to issue currency—that 
is, its bank notes—to three times the amount of its capital, with the 
security, I believe, that the government had the right to have two or 
three directors in the bank. Now, that provided for the issuing of 
certain kinds of currency payable in certain Spanish coin, and the 
claim made was that when the change of sovereignty came it had 
no effect on the right to issue currency for the use of the people 
under that charter. 

Mr. Garrett. The charter rights preserved it. 

Secretary Taft. Yes, sir; that the charter rights preserved it, al¬ 
though it was not so specifically mentioned in the treaty. I have 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 373 

n -°i s ^gh es t doubt that the right of people to issue currency is a 
++vT a - v?? S ^ a i SS fro ? 1 one s 9 y ereign to another, and if it did 
tnat tne right or the bank in question was to issue notes payable in 
bpamsh coins, m the coin of the country granting the right. They 
claim that they have the right to issue notes payable in our particu¬ 
lar com today because of this contract right for them to issue bills 
payable m Spanish coins. To me this is an absurdity, and I have 
never allowed it to interfere with either my dreams or my wa'kin 0, 
hours. [Laughter.] . 

Governor Ide. Do they not complain of the circulation of silver 
certificates ? 

Secretary Taft. Yes; I believe they do, and I believe we put a 
* " a ^q did we no L on their currency beyond a certain amount 1 ? 

Governor Ide. I think we made a general provision that would 
a PPW an Y hank, and as that is the only bank that has authority 
to issue currency it would affect them more than any other. [Laugh¬ 
ter.] It would prohibit them from issuing more than in excess of 
two-thirds of its capital. ' §h| 

Secretary Taft. It is proposed, I believe, to bring suit in the 
Court of Claims—well, the Court of Claims is here. That court has 
entertained jurisdiction for suits against the United States on the 
ground that the Philippine government was the debtor, and they 
can try it in the Court of Claims. Let them go to the Supreme 
Court and see how valuable that asset is that they count on. 
[Laughter.] 

Mr. Garrett. I notice that in this case they charge that we have 
taxed State banks out of existence. 

Secretary Taft. It is a very good subject for legal discussion along 
the line of profits, vested rights, and reasonable fees, but beyond that 
I do not think it comes to anything. 

REMOVAL OF LIMITATION ON MINING CLAIMS IN THE PHILIPPINES. 

There is one other measure, Mr. Chairman, to which I would 
like to refer, if I may, and that is a little bill that ought to be 
enacted here taking off the limitation that Congress imposed with 
reference to persons locating more than one claim. I do not think it 
too strong an expression to use to say that the mining in the Philip¬ 
pines is practically nothing. There is hope of a development, and 
if you get an enthusiastic commissioner who presides over the 
mining department he will outline the possibilities that a company 
might develop out there. We have been out there six years and 
there have been a good many prospectors, but up to this time there 
has been very little profitable mining of any kind, either of coal or 
of precious treasures of the earth, and one of the obstacles has 
been the limitation which prevents a man or a company from own¬ 
ing more than one claim. Now, gentlemen, it seems to me that, with 
due deference, Congress in this business proceeded on the theory 
that the profits on transactions and the growth of wealth ought to 
be restrained by rigid legislation. We have had a theory on the 
subject and we thought that we would try it on the Philippines 
instead of trying it here. If this kind of legislation had been put 
into force with reference to the mines of this country, it would have 


374 HEARINGS BEFORE COMMITTEE OFT INSULAR AFFAIRS. 

been a great obstacle to the progress which has been made in this 
matter. 

Now, it is proposed in this country to limit the use and sale of 
coal lands of the Government, and that is all right. There is no 
danger that the coal industry will not extend in this country, no mat¬ 
ter what are your limitations with respect to it. But there is treasure 
in the Philippines, and more encouragement ought to be given to the 
digging into the bowels of the earth, which is exceedingly difficult 
out there under the tropical conditions that exist and the absence of 
mining laborers, and you ought, therefore, to allow some latitude 
in the hope of prospective gain by letting men have more than one 
claim for mining. That is all I have to say, Mr. Chairman. I am 
very much obliged to you. 

NECESSITY OF LIMITATION. 

The Chairman. Speaking for myself, I think that the intent of 
Congress was this: At that time, you will remember, a great many 
newspapers were saying that we were in the Philippines for purposes 
of exploitation. We were called exploiters, and every sort of accu¬ 
sation was made, that American capital was going there to seize all of 
the resources of the islands. I have had, I presume, a hundred let¬ 
ters myself in which it was intimated that that was the purpose of 
this Government in the Philippine Islands, so that I think, possibly, 
that out of excessive caution Congress proceeded to demonstrate 
that that was not the purpose of the united States in the Philippines. 

Secretary Taft. So far as the limitation on land is concerned, we 
do not ask that you raise that, but in the case of mines, where it is 
so full of risk, it seems to us that you ought to give them a little more 
chance, a little more healthy exploitation. That is, if that means 
an investment of capital. Such investment would greatly benefit the 
islands if there are only one or two successful gold mines that attract 
capital and build up communities, and even if they be owned by one 
man or one company. 

Mr. Garrett. Mainly, here progress has been “the substance of 
things hoped for,” in mining business, and “the evidence of things 
not seen.” [Laughter.] 

COPPER IN THE PHILIPPINES. 

Secretary Taft. Yes; exactly. There is, I think, a very thick 
vein of copper in the mountains of Benguet and Lepante, and if a 
railroad is ever built there it may be profitable to mine it. There 
is gold all over the islands, but it is generally in such form and such 
small quantities as generally not to encourage investment. We would 
like very much indeed to say to people who come there, “You need 
not venture all your money on the question of whether one claim will 
inure to your benefit; you may go and file many claims (just as they 
do in this country) and perhaps out of all of them you will get one 
that will justify your investment.” It is a good deal better to have 
that done than to have the treasure lie in the soil, as it is likely to 
do unless you take some steps of this kind. 

Mr. Gilbert. Still, there ought to be some limitation, ought there 
not? 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 375 

Secretary Taft. There is no limitation in this country. 

Mr. Gilbert. No. 

Secretary Taft. I think it is such a new industry that we ought to 
remove the limitation. 

The Chairman. Last summer I met a gentleman in Wisconsin who 
had just returned from Alaska. I talked to him about two hours 
one evening, and he was exceedingly forceful in saying that there 
ought to have been limitations in Alaska. He told me that one man 
had located acre after acre with no intention of working the land, 
but simply to hold it for purposes of speculation. 

["^WORKING OF MINING CLAIMS IN THE PHILIPPINES OBLIGATORY. 

Secretary Taft. Under the law in the Philippines they are obliged 
to put work on each claim each year in order to secure it, and if the 
law were enforced in Alaska, those fraudulent actions could be pro¬ 
hibited. It is possible here, in the matter of legislation for an infant 
colony, or an infant dependency, for which Congress has to legislate, 
to be too rigid in the first restrictions, even though this lack of rigid¬ 
ity inures to the benefit of some private interest. As Speaker Reed 
used to say, “One can not always object to a law because somebody 
makes a dollar and a half out of it.” And our experience in the Phil¬ 
ippines with reference to getting capital into those islands is so dis¬ 
couraging that the removal of any restrictions is of assistance. 

The Chairman. We thank you very much. Mr. Lowenstein, will 
you take the stand, please? 

STATEMENT OF MR. M. F. LOWENSTEIN, OF CASTLE BROTHERS, 
WOLF & SON, MANILA. 

The Chairman. How long have you lived in Manila ? 

Mr. Lowenstein. Six years, Mr. Chairman. 

The Chairman. With what firm are you connected there? 

Mr. Lowenstein. Castle Brothers, Wolf & Son. 

The Chairman. What is its business ? 

Mr. Lowenstein. They are importers and exporters. 

The Chairman. What? 

Mr. Lowenstein. General merchants. We export practically all 
of the products of the Philippine Islands, with the exception of sugar 
and leaf tobacco. 

The Chairman. You are the largest exporters in the islands? 

Mr. Lowenstein. I believe so. 

The Chairman. And you are thoroughly familiar with business 
conditions in Luzon, and all over the islands generally? 

Mr. Lowenstein. We do business all over the islands. I have had 
considerable experience there. 

PRICE OF PHILIPPINE SUGAR. 

The Chairman. Will you please tell the committee what the price 
of sugar has been ? 

Mr. Lowenstein. According to a cablegram sent to the Secretary 
of War, a copy of which was shown to me yesterday, the average 
price of Iloilo sugar, Nos. 1, 2, and 3, is at the present time 1.25 cents 
gold per pound f. o. b. Iloilo. 


376 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


LOCATION OF SUGAR PLANTATIONS. 

The Chairman. That is the principal sugar place in the islands? 

Mr. Lowenstein. Yes; and has been for years. There is of course 
some sugar raised north of Manila—in Luzon—but the production 
thfere is very much smaller than it was before the war, and it has not 
given promise of increasing in the immediate future. Batangas was 
also a sugar-producing place. 

The Chairman. Iloilo is in Negros and about the center of the 
island ? . 

Mr. Lowenstein. Yes; it is right opposite Negros, and the sugar 
of Negros is barged over to Iloilo. 

The Chairman. It is about the center of the island ? What did 
you say your business was? 

Mr. ^Lowenstein. I am connected with Castle Brothers, Wolf & 
Son, of Manila. We do a general merchandise business. 

Sugar is usually sold in the following shipments: Five No. 3, two 
No. 2, one No. f. Those are the fractions, and that we call “ assorted 
Iloilo sugar.” 


COMPARISON OF PRICE OF SUGAR, PRESENT AND PAST. 

The Chairman. How do the present prices compare with the prices 
last year and the year before? 

Mr. Lowenstein. Well, considering the sugar boom which ob¬ 
tained two years ago, following Brazil’s experience, sugar in the 
Philippines went as high as 7 cents per picul—137.5 pounds. 

The Chairman. How much is that a pound, about? 

Mr. Lowenstein. About 2.6 cents per pound. 

The Chairman. Will you state briefly to the committee- 

Mr. Lowenstein. In the islands sugar was worth about $5.75 per 
picul, or 137.50 pounds, which is about 2.08 cents gold per pound, 
and, as I stated before, the price has lately declined to 1.25 cents per 
pound, at which price it is impossible for the planter in the islands 
and the peons to make both ends meet. 

CONDITIONS OF SUGAR PLANTERS TO-DAY. 

The Chairman. What is the condition, therefore, of sugar in the 
Philippine Islands to-day, generally speaking? 

Mr. Lowenstein. It is in the worst possible shape, and the planter 
is threatened with losing his lands as a result. It is a question 
whether it is best for the planters’ houses, who are carrying these 
planters along, to continue doing so, or whether they had better fore¬ 
close their mortgages. Would you not say so, Governor Ide? 

Governor Ide. I am not'sufficiently familiar with the way in which 
the houses are situated, but I know that they are unwilling to make 
any further additions. 

Mr. Lowenstein. I may explain that more thoroughly. These 
lands are held by the Spanish-Filipino Bank, and the Chinese Bank 
has itself loaned some money to the planters. Most of that financing 
has been done by Spanish houses who have been established there for 
years. It is simply whether it pays these Spanish houses best to con¬ 
tinue carrying these planters m the hope that the conditions may 



HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 377 


eventually improve, or whether it pays them better to foreclose the 
mortgages at the present time. The condition is most unfortunate. 

LOSS OF CARABAOS. 

It was hoped that the inoculation of the carabaos would save the 
animals there, but from advices I understand that the animals are 
dying faster than ever before in the islands, and I learned the other 
day that a great many of the horses of J. G. White & Co., who are 
building a railway on the island of Panay, have lately died. 

THE TWO GREAT NEEDS OF THE PHILIPPINE ISLANDS. 

The Chairman. W hat, in your opinion, as a business man of wide 
experience, are the two great needs of the Philippine Islands to bring 
about business prosperity? 

Mr. Lowenstein. An agricultural bank first; and, secondly, a re¬ 
duction in the traiff as proposed in the pending bill. 

The Chairman. The one that is now pending in the Senate? The 
one that has passed the House? 

Mr. Lowenstein. Yes, sir. 

The Chairman. In what way would the agricultural bank be of 
benefit to the agriculturists of the islands? 

IMPORTANCE OF USURER. 

Mr. Lowenstein. There seems to be a misunderstanding as to the 
importance of the usurer in the islands. The usurer is the man who 
provides loans of 5, 10, and 20 pesos. He is not of importance as far 
as agriculture is concerned, to any extent. On the other hand, we 
have no commercial banks in the islands, with the possible exception 
of the Spanish-Filipino Bank. The other banks, even though the 
charter of the 'International Banking Corporation may be broader 
than that of the other banks, are exchange banks, and any advances 
that they may make are merely for the purpose of making exchanges, 
so that there are no means-in the islands at the present time of provid¬ 
ing the small farmer with money. According to the statistics of the 
provincial agents we have no farms there. To illustrate, we are 
importers of American agricultural machinery. We brought in 
quite a little last year. The people have no money with which to 
buy cattle, farm implements, etc. 

I have in mind a man who has an estate with a good title and 
assessed for taxes at 100,000 pesos. He had about 100 carabaos, but 
they all died, and he has no more money with which to buy more, 
and he does not want to purchase any more because he does not know 
but they will all die of rinderpest. This man came to me and said: 
“I want to buy plows, and I want a traction engine. I want an 
American mill that will mill rice thoroughly, and I will require 
about 8,000 pesos worth of machinery. I am willing to give my land 
as security, and I am willing to pay 12 to 15 per cent, but I want to 
have three years in which to pay that money.” 

Now, I would like to have accommodated this man, but at the 
same time we are a commercial firm, and not bankers, and our capital 


378 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

would then be invested in banking. That is the kind of business, an 
agricultural bank would do. 


INTRODUCTION OF AMERICAN PLOWS. 

We have brought in a number of American disk plows. We have 
been told by the people that they did not believe the Filipino farmer 
would take to them, but the result has been very remarkable. We 
have sold several hundred already. A man who uses the disk plow 
can go down into the soil 14 inches, whereas now they use the old 
style hand-made plow made in the Philippines, which perhaps turns 
the soil to a depth of 2 or 3 inches. We have made demonstra¬ 
tions in different parts of the country to show the plows, and we 
have had a peculiar experience in that regard. At one time we went 
to a place where there was quite a meeting of the people to see the 
plows work, and I remember to have heard them say on one occa¬ 
sion, “A carabao can not pull this plow.” An American would take 
a carabao and hitch him up to a plow, and, very much to their sur¬ 
prise, the plow not only worked well, but worked about four times as 
well as the native plow. 

NEED OF MONEY FOR PURCHASE OF FARM IMPLEMENTS. 

These people are very anxious to be able to provide themselves 
with facilities, and the first thing a man needs is a plow. While the 
sum of 25 to 100 pesos is not much to a man here, it is a great deal in 
the islands. People who have the means to do so want to grow rice. 
As a result of the improved American machinery introduced into the 
islands two years ago the rice industry is in better shape than ever 
before, and I believe that if these people along the line of the Manila 
and Dagupan Railroad could get assistance through an agricultural 
bank, I am free to say that in two or three years it would not be 
necessary for the Philippine Islands to longer purchase rice. 

RICE CULTURE. 

The Chairman. The rice crop is a great thing there? 

Mr. Lowenstein. It is. 

The Chairman. And yet they have imported considerable quan¬ 
tities. 

Mr. Lowenstein. Yes. Up to 1896 the country produced enough 
rice for home consumption, but by reason of the insurrection and 
rinderpest it became necessary to import it to the extent, I think, at 
one time of about 1*12,000,000 in amount. Last year it was in the 
neighborhood of 1*4,000,000. The crop last year was no larger than 
before, but the imports fell off. A good many of the older houses 
in the Philippines have had to decrease importations owing to the 
fact that the Philippine people did not have money with which to 
buy rice. They had to live on other native food. 

Mr. Jones. What are the conditions, so far as you know them, of 
agriculture in the neighborhood of Cavite now as compared with 
recent years ? 

Mr. Lowenstein. They are improving. Of course the country 
was in a state of war and the ladrones (robbers) were so prevalent 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 379 

that it was impossible to develop the resources of the country. Farm¬ 
ers did not feel that their caraboa or their implements were safe, but 
last year the province of Cavite made a little improvement. From 
now on I think it will improve. 

HEMP CULTURE. 

The Chairman. The possibilities for the development of hemp 
culture are very great in the Philippines? 

Mr. Lowenstein. Yes; but it is not generally understood that it 
grows only m certain sections. It would not grow in the northern 
part of Luzon. 

The Chairman . But the possibilities are not yet realized ? 

Mr. Lowenstein. Not yet- It takes two or three years to get a 
crop of hemp. 

The Chairman. You exported two or three million dollars’ worth? 

Mr. Lowenstein. About that amount. The year ended December 
31, 1905, was an unusually small one—about 760,000 bales, against 
929,000 bales for the preceding year. For the three years preceding 
it has been about 940,000 bales. The shortage was due to drought in 
1905 and the very severe typhoon of September 26, 1905. In previous 
years as high as 2,200,000 bales were exported. 

COPRA CULTIVATION. 

The Chairman. There is also very great possibilities for the pro¬ 
duction of copra ? 

Mr. Lowenstein. Yes; but that requires seven years to produce a 
crop. What they need at the present time is immediate help. It 
must be borne in mind that the Filipino can not exist on promises, 
but must have help now or he is going to the wall. 

jjGREATfNEED FOR AGRICULTURAL BANK. 

It is all very well to get as low a rate of interest as possible in con¬ 
nection with the establishment of an agricultural bank and to safe¬ 
guard the people as much as possible, but I am in close touch with 
the Philippine people. I have warm friends among them, as much, 
possibly, as any American business man there, and if I were asked as 
to whether the bank should be established immediately on fairly good 
terms or let us wait three years more for very much more liberal 
terms, I should say for God’s sake give it to us to-day on the best 
possible conditions.! ,— 

|PROMPT ACTION NECESSARY. 

And that is why I would ask you gentlemen, I would beg you gen¬ 
tlemen, to let us have this bill at this session of Congress; and I 
would also beg you to permit the Philippine Commission to have as 
much authority, as much latitude, in arranging the details as pos¬ 
sible. I hope you will see your way clear, as nearly as possible, to 
recommending the bill which is now before the Senate, 


380 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

DETAILS OF ESTABLISHMENT OF BANK SHOULD BE LEFT TO THE PHILIP¬ 
PINE COMMISSION. 

I have had considerable experience with the Philippine Commis¬ 
sion, and Governor Ide will confirm me when I say that I have taken 
an interest, as merchants do over there, in important legislation that 
has taken place in the islands. I usually appear before the public 
sessions of the Commission in Manila and give my views there, as 
most merchants do, as to matters of legislation. The Philippine Com¬ 
mission has always driven the best bargain possible for the Philip¬ 
pine people, and if you leave the detail of this bill to the judgment 
of the Philippine Commission, the interests of the Filipinos are going 
to be safeguarded in every way possible. 

If we felt sure that capital was going to fight over the chance of 
getting this charter as proposed under the pending bill, I would say 
this, “Make the provisions as severe as possible, but I know as a 
positive fact that capital is not going to rush in there for the purpose 
of establishing an agricultural bank. I have talked with a number 
of bankers in New York during this week and I do not believe that 
there is going to be any American capital available for the establish¬ 
ment of a Filipino agricultural bank, because American capital can 
do better in the West right now. I know of one English banking 
interest that is ready to go into the Philippines and organize an agri¬ 
cultural bank, provided the provisions or the act are not too severe. 
If you make the provisions too severe, I do not think that you are 
going to get the money necessary, even with a 4 per cent guaranty. 
That is of the very greatest importance, gentlemen, and I hope that 
you will bear it in mind. 

DISCRIMINATION IN INTEREST RATES. 

A good deal has been said about the rates of interest and the 
advisability of permitting different rates to be charged, in the dis¬ 
cretion of the bank. I would lik'e to call your attention to the fact 
that security to be offered by the borrowers would differ very greatly. 
Now, for instance, *a man who has only carabaos has very much poorer 
security from a banking standpoint than the man who has agricul¬ 
tural implements as security, because the carabaos might die at any 
time. Now, then, in the question of security, some are very much 
more secure than others. Hemp crops are much surer than rice 
crops, as the latter are likely to be destroyed at any time. The rice 
in the Cagayan Valley, owing to the storms which prevail there in 
October and November, is sometimes destroyed to a great extent. 
The carabaos are such an uncertain quantity now that the farmers 
prefer to buy traction engines, although, of course, every small farmer 
can not buy traction engines, but the municipalities would, no doubt, 
devise some means of buying a traction engine or steam plow for the 
community. 

Mr. Olmsted. An engine to work on the rice lands? 

Mr. Lowenstein. No; because the rice is grown there according 
to the Japanese method, wet, but it is possible in certain sections to 
adopt the Texas method of dry planting, and no doubt that will be 
done on the larger tracts of land. 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 381 
FINANCIAL CONDITIONS IN THE PHILIPPINES. 

Mr. Garrett How do the financial conditions compare with the 
conditions there before American occupation? 

Mr. Lowenstein. I should say that the financial conditions are 
worse than they ever have been. 

Mr. Garrett. Even before the insurrection? 

Mr. Lowenstein. Yes. 

Governor Ide. You mean the industrial conditions. 

Mr. Lowenstein. I mean both industrial and financial, Governor. 

PROBABILITY OF SUCCESS OF THE BANK. 

A good deal has been said about the security of the bank. I 
would like to call attention to the fact that a railroad before it can 
operate has got to build 20 miles, which is money actually invested 
and which will remain invested. It is different with a bank. A 
bank can feel its way gradually, so to speak, because if it makes a suc¬ 
cess of its business it can then invest more money, if possible, etc. 
And so it seems to me that a bank conservatively managed is bound 
to make a success. 

The Chairman. You think, then, that it would be all right to pro¬ 
vide that the bank should start in with a capital of no more than 
$50,000 at first? 

Mr. Lowenstein. I tl^ink that it should be left to the Philippine 
Commission to decide this. I think that they will make the very 
best bargain possible, as they did in the case of the telephone and the 
telegraph lines. 


TERRITORY TO BE COVERED BY BANK. 

Mr. Gilbert. You say that there is a great demand for an agricul¬ 
tural bank from all over the vast territory of the archipelago. How 
could the beneficial effects of the bank extend all over those islands? 
Would it not be best to have several banks? 

Mr. Lowenstein. The bank would have branches all over the 
islands. 

The Chairman. I have heard so many times about the immense 
territory of the Philippines. It is a fact, however, that if the islands 
were all put into one aggregate batch, the whole territory would not 
be as large as that of New Mexico. 

Mr. Gilbert. I understand that the beneficial effect would be more 
immediate around the territory where the bank is located, and that 
this benefit would not extend to the more distant portions of the 
islands, and my purpose in asking the question was to ascertain the 
opinion of this gentleman as to whether there should Dot be several 
branches of the bank. 

Mr. Lowenstein. I am not sufficiently familiar with the details 
of the bill, but Professor Kemmerer can reply to that. 

Professor Kemmerer. The idea is that the bank shall extend its 
branches 'as far as the success or means of the bank permit. The 
Egyptian bank has 72 branches. 


382 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 


TERRITORY COVERED BY EGYPTIAN BANK. 

Mr. Rucker. What is the territory covered by those 72 branches? 

Professor Kemmerer. All of the delta of the Nile. 

Mr. Rucker. Can you give it to me in miles ? 

Professor Kemmerer. I suppose it is something like 20,000 square 
miles. The total agricultural area is 17,000 square miles. 

Mr. Rucker. How does that compare with the Philippines? 

Professor Kemmerer. The total agricultural area of the Philip¬ 
pines I believe- 

Mr. Rucker. Apprpximately, if you can. 

Professor Kemmerer. About 7,000,000 square acres, and the part 
of that that is under cultivation is about one-half, say 3,500,000 
square acres. I do not recall the exact figures, but I have them in 
my i report. 

Mr. Gilbert. A peasant at quite considerable distance from the 
location of the bank building, in order to borrow a small amount of 
money would not be apt to be benefited because of the poor means of 
transportation ? 

Professor Kemmerer. The islands are all divided up according to 
provinces. I think that with the anxiety on the part of the natives 
at the present time they would be willing to go considerable dis¬ 
tances to make applications for loans, and as the bank’s business ex¬ 
tended it would extend to the best provinces, the most successful 
ones. It would have traveling agents going all over the country 
as in Egypt. The traveling agent is a very important factor in 
Egypt. . 

Mr. Lowenstein. We have a very good system in the islands, 
which enables us to reach all of the important parts of the country at 
least once or twice a month. 

WHAT PRODUCTS WOULD BANK ASSIST? 

Mr. Olmsted. What are the agricultural products of the Philip¬ 
pines that can be increased in volume? You have stated that the 
price of sugar is so low that it would not pay to raise it at the present 
time. 

Mr. Lowenstein. Outside of sugar, rice is the only one that offers 
any immediate help. What we require is immediate help. We can 
raise hemp and then maguey, which is similar to the American sisal 
plant, but it takes two years to get a crop after you have once planted 
the hemp, and the natives have not the money with which to buy the 
young hemp for planting. 

Mr. Olmsted. My thought was, what products this agricultural 
bank would most provide assistance for. 

Mr. Lowenstein. Well, all, approximately, but principally rice, 
and, secondly, sugar. It would enable the producer to employ more 
up-to-date methods in producing his crops, and, therefore, would 
cheapen the cost of their production. 

SUGAR RAISING IN THE PHILIPPINES. 

Mr. Olmsted. Can they raise sugar in the Philippines and compete 
with the product of the other countries successfully in the markets of 
the world 3 



HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 383 

1 ?- houl(i sa J not > owing to many circum¬ 
stances that obtain there. I think that we can never compete with 
sugar raised m other portions of the world until the market of the 
United States is thrown open to Philippine sugar; not in order that 
the sugar may be sent here, but to enable us to make China and Japan 
pay us a better price for our sugar. At the present time we are abso¬ 
lutely at the mercy of China and Japan. 

* Ti e ^ H -r IRMAN -^kaJ is a very interesting argument. It was made 
t ^ 11E PP mes to the Taft party when we were there. 
r ’ Lowenstein. I have found, that in the United States a duty of 
, c ? n ^ con tronts me. I have got to deduct that from the price 
that is charged here for our sugar, and knowing that I can not cut 
the price after deducting the duty and insurance, anything that I 
can get in excess of that is, of course, so much gain. China naturally 
buys its sugar as cheaply as possible in the Philippines, so that it 
pays as little m excess of that parity mentioned as possible. But if 
for instance, the tariff were reduced so that there would be a duty 
of only one-half a cent a pound on our sugar, the difference between 
1.3 cents and half a cent, being 0.8 cent per pound, that would go into 
the pocket of the Philippine producer,, because China and Japan 
would be compelled to pay that charge. 

Mr. Olmsted. Could they pay that much more and still get it as 
cheaply as from other countries? 

Mr. Lowenstein. They could. We have absolutely no market 
for our sugar at the present time except that. Sometimes a little 
goes to England. 

Mr. Olmsted. If we reduced the tariff, would the agricultural 
bank assist the producer? 

Mr. Lowenstein. It would, because it would enable him to increase 
his production. It would enable him to buy up-to-date American 
farming machinery, and later on it would assist him in the establish¬ 
ment of central mills, at least it would attract capital to establish 
central mills, which would still further reduce the cost of the sugar. 

AGRICULTURAL CONDITIONS IN THE PHILIPPINES. 


Mr. Rucker. Are the agricultural conditions in the islands worse 
now than they were when we went there ? 

Mr. Lowenstein. No; I said the financial conditions. I referred 
particularly to the financial and industrial conditions. 

Mr. Rucker. The agricultural conditions are part of the financial 
and industrial conditions, are they not? 

Mr. Lowenstein. I said as compared with when I first went there. 

Mr. Rucker. Compared with the conditions when we went there, 
are the agricultural conditions worse now than when we went there? 

Mr. Lowenstein. The production of rice is about the same, as far 
as I can remember. 

Mr. Rucker. How about sugar? 

Mr. Lowenstein. I am not clear as to sugar. I think that it is 
also true as to sugar. I was going to refer to hemp. The production 
of hemp was greater than it was last year, and the same is true of 
copra. 

Mr. Olmsted. And you are now comparing with 1906? 


384 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Rucker. You said that the agricultural bank would enable 
the farmer to buy more machinery, and thus make his profits larger. 
He has been using primitive machinery all through the past. 

Mr. Lowenstein. Yes, sir. 

Mr. Rucker. And the query in my mind is why he can not do as 
well to-day with the old-fashioned machinery, crude and old as it 
is ; as he has been doing. 

Mr. Lowenstein. Well, first of all, the Filipino has not made any 
headway in the past. 

Mr. Rucker. No; but it seems that he is not going backward. His 
condition is not worse than it has been. 

COST OF LIVING INCREASED IN THE PHILIPPINES. 

Mr. Lowenstein. The cost of living has increased in the Philip¬ 
pines. 

Mr. Rucker. To what is that attributable—to the failure of the 
crops there? 

Mr. Lowenstein. No; to the general advance in the price of 
staples throughout the world, and also to the advanced cost of labor 
in the rice-producing country. We have an office at Hongkong, and 
to-day we are paying 50 per cent more for labor than we did four or 
five years ago. And the same is true in Japan. 

PHILIPPINE EXPORTS. 

Governor Ide. On the subject of the general conditions of the 
islands, perhaps a statement of the exports would furnish some meas¬ 
ure of comparison by which this could be judged. The exports in 
1899 were ^29,000,000—and I am now giving only the round num¬ 
bers—1900, ^39,000,000; 1901, ^46,000,000; 1902, f*49,000,000; 
1903, :P66,000,000; 1904, ^60,000,000; 1905, f*64,000,000, so that 
it would appear that, so far as the exports are concerned, that there 
had been a very decided improvement since 1899 and 1900. 

Mr. Rucker. What do those exports consist of principally?. 

Governor Ide. Agricultural products, principally. 

Mr. Rucker.' There is not much manufacturing? 

Governor Ide. Very little. 

Mr. Rucker. They seem to have grown very rapidly in the past. 

Governor Ide. Rapidly when it is considered that many of their 
cattle have died, they have had locust pests, their houses have been 
burned, and that really they have recovered only in a measure from 
those difficulties. 

Mr. Rucker. Yes; they run from ^29,000,000 of exports in 1899 
up to 5^64,000,000 in 1905, which is a considerable increase—more 
than 100 per cent; and a steady increase every year, excepting one, 
I believe. Oiie year there was a little falling off. In view of this, 
I do not see how the farmer can be so much worse off with the exports 
increasing right along. 

Governor Ide. Mr. Lowenstein takes his own view on the subject, 
and possibly I might take a little different view on that question. 
However, exports of only ^65,000,000 for 8,000,000 people is pitiably 
small. 

Mr. Rucker. It is smaller than is used to be ? 


HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 385 

Governor Ide. Yes 

Mr. Rucker. What was it before the war? 

Governor Ide. I have not the statistics here. 

Mr. Rucker. W hat is your recollection of it? 

Governor Ide. I do not know whether I can give you those statis¬ 
tics, and I do not think that they would be very useful. I have not 
the statistics here. I was going to suggest the reason why these 
statistics would not furnish very satisfactory information. 

Mr. Rucker. I want to get all the information you have. 

Mr. Lowenstein. Before the war hemp was as low as 4f cents in 
New T ork, and it is to-day worth 10 cents. It has been high for 
the last four years. Copra, on the other hand, was sold in the 
Philippines during my time as low as 4^ pesos per picul, and the last 
sale was made at $12 per picul. Therefore these exports are some¬ 
what misleading. On the other hand, there are only certain sec¬ 
tions that are benefited by the increased value of the hemp exports; 
and, mind you, they amount to about 65 per cent of the total ex¬ 
ports. Hemp is produced only in this part of Luzon [indicating], 
in Samar, and in Mindanao, so that this other great country up in 
northern Luzon and the southern islands are not at all benefited by 
this apparently great showing in our exports. 

Furthermore, on copra, of which in 1903 the exports amounted to 
100,000 tons, the price at that time was, in the market of Marseille, 
between twelve and thirteen pounds sterling per ton; at the present 
time it is between twenty and twenty-two pounds per ton. But 
copra is not grown all over the islands; it is grown principally in 
the southern part of Luzon, along the lake, and on the island of 
Cebu and northern Mindanao. So the great bulk of agriculturists 
are just as badly off as they ever were, or worse, because their cost 
of living has increased; whereas rice at that time was* worth from 
three to four pesos per picul, it is now worth from five to six. Before 
the war he did n it have to eat imported rice, because rice was pro¬ 
duced right in his country. To-day he must buy imported rice, at 
a price from five to six pesos per picul, which is prohibitive for the 
very poor man. 

CONDITION OF THE FILIPINO SHOULD BE IMPROVED. 

But there is one other thing I desire to call attention to. I think 
you all mean to improve the condition of the Filipino. If we want 
the Filipinos to continue being a rice and fish eating people, then 
• of course it does not matter much what we are going to do for them. 
But we want the Filipino to go ahead; we want him to improve his 
method of living. And he is doing it very rapidly. 

Mr. Olmsted. What do you want him to eat? 

Mr. Lowenstein. We want him to eat canned milk, for instance, 
and American flour. The importation of flour is increasing very 
rapidly. He is beginning to eat bread, which he hardly knew a few 
years ago. He uses canned milk, he uses canned meats, he uses 
canned salmon, he uses ham and bacon, he uses better cloth than he 
used to buy before. And as he has more money he spends more and 
lives better; he educates his children better; in other words, he 
becomes a better man. 

35815 - -08 - 25 


386 HEARINGS BEFORE COMMITTEE ON INSULAR AFFAIRS. 

Mr. Garrett. He eats canned meats? 

Mr. Lowenstein. Yes, sir. 

Mr. Parsons. What caused the falling off in the hemp exports a 
year ago ? 

Mr. Lowenstein. As I said before, the drought, to begin with, and 
that severe typhoon we had; and the same with reference to the copra. 

WAGES OF LABOR INCREASED. 

The labor in the Philippines is going up very rapidly. For in¬ 
stance, down here in Sorsogon, where they produce hemp, the laborers 
get ^2, ^3, and :P4 a day for hemp stripping and loading steamers. 
Of course, that sort of wages was never thought of before American 
occupation. That is why I say labor has increased and the cost of 
production has increased. 

Mr. Ide. That is not the general compensation for laborers in the 
islands ? 

Mr. Lowenstein. No; but in Manila the wages have increased. 
The wages of a longshoreman at the present time are 75 cents gold 
per day. The government pays 50 cents and more, and of course they 
do not make their laborers work as hard as we do. As the Filipino 
gets more money he spends more, he lives better, he improves his own 
condition and the condition of his family. I think the experience of 
Doctor Barrows, the head of the school system, is as important in 
that connection as anything else; and he told me the other day that 
throughout the islands the natives had begun to live better than 
they did before. 

THE GREATEST NEED OF THE PHILIPPINE ISLANDS. 

The Chairman. To sum up your experience, and in your judgment, 
what is the one thing most needed in the islands in the way of legis¬ 
lation ? 

Mr. Lowenstein. I think the agricultural bank will do more imme¬ 
diate good than anything else there. 

The Chairman. Well, I think we will leave it right there. 

Mr. Lowenstein. I thank you very much. 

Whereupon, at 12.40 p. m., the committee adjourned. 


59th Congress, ) HOUSE OF REPRESENTATIVES, j Report 
Session^ j | No. 7559. 


AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 


February 7, 1907.—Committed to the Committee of the Whole House on the state 
of the Union and ordered to be printed. 


Mr. Cooper, of Wisconsin, from the Committee on Insular Affairs, 
submitted the following 

REPORT. 

[To accompany H. R. 25186.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 25186) to provide for the establishment of an agricultural bank 
in the Philippine Islands, beg leave to report that they have had the 
same under consideration and recommend that said bill do pass, with 
the following amendments, to wit: 

In line 5, page 3, of the bill, strike out the word 44 dollars ” and 
insert in lieu thereof the word “pesos.” 

In line 16, page 3, of the bill, strike out the word 44 may ” and insert 
in lieu thereof the word 44 shall.” 

In line 6, page 4, of the bill, insert after the word 44 shall” the 
words 44 not contract for.” In the same line, insert after the word 
“collect” the words 44 or receive.” 

In line 7, page 4, of the bill, strike out the word 44 not.” 

In line 10, page 7, of the bill, change the period to a colon, and at 
the end of the line add the following provision, to wit: 44 And provided 
further , That the surplus fund shall not be required to exceed the 
paid-up capital of the bank.” 

Change the number of section 13 of the bill to 44 12,” and renumber 
the following sections to correspond. 

So that said bill when amended will read as follows, to wit: 

A BILL To provide for the establishment of an agricultural bank in the Philippine Islands. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That for the purpose of aiding in the establishment and opera¬ 
tion of such an agricultural bank in the Philippine Islands as the general government 
thereof may hereafter specifically authorize, the Philippine government is empowered 
to guarantee an income of not exceeding four per centum per annum upon the aver¬ 
age annual amount of the capital of such agricultural bank actually invested in agri¬ 
cultural loans, such amount to be determined in accordance with, and such guaranty 
to be granted by, an act of the Philippine government. 


387 






388 


AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 


Sec. 2. That the guaranty shall be made to an incorporated company organized 
under the laws of the Philippine Islands, with headquarters in Manila and with such 
branches in various parts of the islands as their needs may require, the name of such 
company to be The Philippine Agricultural Bank. 

Sec. 3. That the articles of association of The Philippine Agricultural Bank shall 
be approved by the Philippine Commission before they shall become operative and 
before the guaranties and privileges provided for in this act shall become effective; 
and that said articles of association, after being once so approved by said Commis¬ 
sion, shall not be amended nor in any way altered by said corporation without the 
express authorization, in writing, of the Philippine Commission. 

Sec. 4. That the bank shall treat with especial attention and favor applications of 
small farmers for loans, and shall not grant loans except for the purpose of assisting 
agriculture in the Philippine Islands. 

Sec. 5. That at least two directors of said bank shall be appointed by the governor- 
general, at least one of whom shall be a native of the Philippine Islands. Every 
subcommittee of the board of directors shall have as one of its members one of the 
directors appointed by the governor-general. 

Sec. 6. That the bank shall make no expenditures for the erection, improvement, 
or equipment of bank premises which shall involve the payment of five thousand or 
more pesos during the period of the government’s dividend guaranty without first 
obtaining the approval of the secretary of finance and justice. 

Sec. 7. That in no event shall the total annual contingent liability under the guar¬ 
anties authorized by this Act at any time exceed five hundred thousand pesos, and 
no such guaranty shall continue fora longer period than twenty-five years: Provided, 
That said guaranty shall at no time render the Philippine government liable to the 
bank for an annual payment greater than four per centum of the average annual 
amount of the bank’s duly authorized capital actually invested in agricultural loans. 

Sec. 8. That every director, except those appointed by the government, shall own 
shares in the bank representing a par value of at least five thousand pesos. Daring 
the period of his directorate these shares shall be kept in the custody of the treas¬ 
urer of the Philippine Islands. They shall not be alienated, pledged, nor in any 
way charged during his directorate. 

Sec. 9. That the bank shall not grant loans on any of the following classes of prop¬ 
erty: First, theaters; second, mines; third, quarries; fourth, property in joint owner¬ 
ship, unless the mortgage extends to the whole of such property and has the consent 
of all the cosharers; fifth, the bank’s own stock. 

Sec. 10. That the bank shall uot be permitted to hold real estate beyond that 
required for business premises: Provided, That the temporary acquisition of land as 
the result of foreclosure, or otherwise on account of a debt, shall be permitted on 
condition that land so acquired shall be sold within a reasonable time of the date of 
acquisition. 

Sec. 11. That the bank shall not contract for, collect, or receive interest at a rate 
of more than ten per centum per annum on the amounts of the respective loans out¬ 
standing. The rate of interest shall be reduced in the following manner: As soon as 
the^bank shall have accumulated a surplus in the manner hereinafter provided equal 
to twenty-five per centum of its cash paid-up capital, the rate of the interest upon the 
balances of all loans outstanding and upon new loans shall be reduced to not more 
than nine per centum per.annum; when the surplus shall equal fifty per centum of 
its cash paid-up capital, the reduction shall be to not more than eight per Centum per 
annum; when the surplus shall equal seventy-five per centum of its cash paid-up 
capital, the reduction shall be to not more than seven per centum per annum, and 
when the surplus shall equal the cash paid-up capital the reduction shall be to not 
more than six per centum per annum, any reduction of interest to go into effect upon 
the proclamation of the secretary of finance and justice. 

Sec. 12. That the bank, through its duly authorized representatives, shall be per¬ 
mitted to inspect all properties under mortgage to itself with reference tp their value, 
maintenance, and management, and any other circumstances which may have to do 
with the security of the bank’s loans. 

Sec. 13. That the bank shall be entitled to inspect the registration books and land 
records relating to properties within its area of operations, and to take extracts there- 
irom free of charge. 

Sec. 14. That each year the bank shall submit to the treasurer of the Philippine 
Islands, on forms prepared by him, a statement, sworn to before a notary by the 
president or cashier of the bank, giving, first, an itemized statement of its resources 
and liabilities at the close of the calendar year; second, its operations during the 
^ a i 8 t a tement of (a) the loans made, (b) the sums collected, 
'C/ the past-due loans outstanding, (d) loans renewed, (e) salaries and expenses of 
operations (f) mortgages foreclosed, (g) attachments made, and (h) any other infor¬ 
mation with reference to the bank’s resources, liabilities, and operations which the 


AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 389 


treasurer of the Philippine Islands may request. The Philippine government shall 
by law fix the date when such report shall be submitted. 

Sec. 15. That at the end of each calendar year the bank shall compute its net earn¬ 
ings for the year in the following manner: To its gross earnings for the year it shall 
add all sums received during the year in payment of obligations to the bank which 
became due during previous years and were not paid. From the total sum so ob¬ 
tained the bank shall deduct (first) all expenses of operation for the year and (sec¬ 
ond) all sums maturing during the year and not paid on or before the thirty-first 
day of December. The difference shall be considered for the purposes of this act to 
be the bank’s net profits (or net loss, as the case may be) for the calendar year in 
question. 

Sec. 16. That from the bank’s annual net profits so computed the bank shall set 
aside a sum equal to four per centum of its cash paid-up capital for the purpose of 
dividends, shall pay the Philippine government any sums due it on account of ad¬ 
vances under the guaranty contained in this act, and of the remainder at least 
twenty per centum shall be credited to the bank’s surplus fund; until said sum shall 
be equal to twenty-five per centum of the bank’s cash paid-up capital, ten per centum 
shall be paid to the Philippine government, and the balance shall accrue to the cor¬ 
poration for dividends, or such other uses consistent with law as it may determine 
upon. 

After a surplus fund equivalent to twenty-five per centum of the bank’s cash paid- 
up capital stock has been accumulated, at least twenty-five per centum of the bank’s 
annual net profits over and above a sum sufficient to pay the aforementioned four 
per centum dividends and any indebtedness due the government on account of its 
guaranty shall be placed to the credit of the surplus fund: Provided , That if the sur¬ 
plus fund should at any time fall below twenty-five per centum of the bank’s cash 
paid-up capital stock, forty per centum of the net annual profits over and above an 
amount sufficient to pay the aforementioned four per centum dividends and to meet 
the bank’s obligations to the Philippine government shall be placed to the credit of 
the surplus fund each year until said fund is restored to the equivalent of twenty-five 
per centum of the bank’s cash paid-up capital stock: And provided farther , That the 
surplus fund shall not be required to exceed the paid-up capital of the bank. 

Sec. 17. That the surplus fund, except such a part thereof as shall at any time be 
in excess of twenty-five per centum of the bank’s cash paid-up capital, shall be 
invested in one or more of the following classes of investments, and that part of the 
surplus so invested shall be known as the primary surplus: 

First. Bonds or other certificates of indebtedness of the insular government of the 
Philippine Islands. 

Second. Bonds or other certificates of indebtedness of the municipal government 


of the city of Manila. 

Third. Interest-bearing deposits in any bank or banks doing business in the Philip¬ 
pine Islands which shall have an unimpaired capital and surplus equivalent to two 
million pesos or over. 

If at any time the primary surplus shall exceed at the current market prices of the 
securities held twenty-five per centum of the bank’s cash paid-up capital stock, the 
excess or any part thereof may be loaned by the bank in the same manner and for 
the same purposes as is the bank’s capital. That part of the surplus so invested 
shall be known as the secondary surplus. ■ 

If, by reason of the payment of dividends from the primary surplus, the deprecia¬ 
tion of the securities in which it is invested, or of other causes, said primary surplus 
shall at any time fall below an amount equal to twenty-five per centum of the bank’s 
cash paid-up capital, the twenty-five per centum invested in the manner aforemen¬ 
tioned shall be restored as rapidly as possible, and for that purpose the secondary 
surplus shall be correspondingly reduced. . . , 

Sec. 18. That if in any year during the period of this concession there shall be a 
net loss, or if the net profits as above computed shall not be sufficient to pay the 
aforementioned dividends of four per centum upon the bank’s cash paid-up capital, 
there shall be deducted from the surplus fund a sum sufficient, together with the net 
profits of said year, to enable the bank to pay the aforementioned dividend of four 
per centum; and if the entire surplus fund and the net earnings of the year taken 
together shall not be sufficient to enable the bank to pay said dividend of four 
per centum on the bank’s cash paid-up capital stock, then, and not otherwise, there 
shall be paid to the bank by the treasurer of the Philippine Islands, acting under 
specific instructions from the secretary of finance and justice, a sum, out of the funds- 
of the insular treasury not otherwise appropriated, sufficient, together with the sur¬ 
plus and the net profits for said year, to enable the bank to pay the amount due 

under the aforementioned guaranty. , . ., * 

Sec 19 That money paid by the Philippine government pursuant to the afore¬ 
mentioned guaranty, With or without interest thereon, as the Philippine government 


390 AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 


shall by law determine, shall be a contingent liability of the bank to the Philippine 
government, and, as such, shall constitute a lien upon the annual net profits of the 
bank, subject only to the right of the stockholders to receive therefrom four per 
centum dividends per annum upon the bank’s cash paid-up capital stock. No divi¬ 
dends above four per centum shall be paid, and no profits credited to the surplus 
fund, either during the period of the government’s guaranty or subsequent thereto, 
until the Philippine government shall have been repaid in full, principal and inter¬ 
est, all sums advanced to the bank under said guaranty. 

Obligations of the bank to the Philippine government arising from advances made 
pursuant to the aforementioned guaranty, and existing at the time when the bank 
shall go into liquidation, shall constitute a lien on the bank’s assets, subject only to 
the payment of the bank’s legitimate debts, and the repayment to the stockholders 
of the par value of the bank’s duly authorized cash paid-up capital stock: Provided , 
That nothing in this section shall be interpreted as a guaranty on the part of the 
Philippine government to the stockholders of the bank of the par value of the bank’s 
cash paid-up capital stock when the bank shall go into liquidation. 

Sec. 20. That all accounts and records of transactions, either directly or indirectly 
pertaining to the affairs of The Philippine Agricultural Bank, shall be kept entirely 
separate and distinct from the official accounts and records of the various provincial 
and municipal treasurers, and funds belonging to said bank shall be kept entirely 
separate from the municipal, provincial, and insular funds held by said treasurers, 
and shall be labeled as such. 

Sec. 21. That in case the Philippine government shall be unable by private capital 
to secure the establishment of such agricultural bank, the government of the Philip¬ 
pine Islands is hereby empowered and authorized to appropriate, out of the funds m 
the Philippine treasury, moneys belonging to said government, for the purpose here¬ 
inafter mentioned. The sum or sums so appropriated shall not in the aggregate at 
any time exceed the amount of the seigniorage standing to the credit of said govern¬ 
ment from the recoinage of the silver coins of the Philippine Islands, and shall be 
applied to the establishment of an agricultural bank, to be known as The Philippine 
Agricultural Bank, such bank to be a bureau of said government, and to be estab¬ 
lished and conducted in accordance with the provisions of this Act, in so far as the 
same are applicable, and with legislation to be enacted by the Philippine government 
and with rules and regulations to be made by the Philippine Commission, such rules 
and regulations to be approved by the Secretary of War, the sum or sums so appro¬ 
priated to be applied to no other purpose. 

The economic future of the Philippine Islands depends upon agri¬ 
culture more than upon any other industry. The bill reported by 
your committee has for its purpose the betterment of agricultural 
conditions in the Philippines, which have been in a depressed condition 
as a result of the insurrection', the rinderpest, the destruction of the 
carabaos (farm cattle), and other unfortunate happenings, and also of 
the scarcity of money in rural districts, and of the consequent very 
high rate of interest on agricultural loans. 

The loaning of money to farmers is entirely in the hands of usurers, 
charging interest at rates of from 40 to 100 or more per cent per 
annum. The pending bill proposes to lower these exorbitant rates to 
not more than 10 per cent per annum by authorizing the Philippine 
government to establish an agricultural bank, this bank to make .no 
loans, except for agricultural purposes, to charge not more than 10 per 
interest, and to be guaranteed 4 per cent upon its loans by the Philip¬ 
pine government. 

In its essential features this bank is to be modeled upon the plan of 
the Agricultural Bank of Egypt. In Egypt, until very recently, 
there had been for generations a similar robbing of the peasantry by 
usurers. Interest rates were from 50 to 100 per cent per annum, small 
farmers being practically slaves of the money lenders. With a view 
to remedying this evil, the government of Egypt, in 1895, decided to 
make an experiment by loaning £10,000 ($50,000) directly to small 
farmers, no loan to exceed £10 ($50). It was generally prophesied 
that this experiment would be a failure, because of the thriftless 


AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 391 

character of the peasantry; but, on the contrary, it proved a surpris¬ 
ing success a success so great that only three years later (1898) the 
INational Bank of Egypt was established, the principal reason for its 
establishment being the government’s desire still further to extend to 
the small landowners of Egypt facilities for borrowing money at 
cheap lates, and thus to take them out of the clutches of the usurers, 
lhe agricultural loans of this bank became so large in amount that in 
the year 1902 the government organized a separate institution—the 
Agricultural Bank of Egypt. The 44 sole object” of this new bank 
was declared in the statutes under which it was organized to be 44 to 
make advances to small farmers.” Its capital of £2,500,000 
ri^’000) was a -M furnished by private individuals, the government 
Egypt guaranteeing a rate of interest on loans of 3 per cent per 
annum, and the bank itself being permitted to charge not more than 
9 per cent per annum. 

From its very beginning the Agricultural Bank of Egypt has been 
a remarkable success. In a little less than four years its authorized 
capital has been increased from $12,500,000 (paid-up capital $6,250,000) 
until at present it amounts to more than $50,000,000. Its manager 
recently declared—and his statementwas corroborated b} 7 the manager 
of the National Bank of Egypt—that the Agricultural Bank of Egypt 
had a total of loans outstanding of $35,000,000, of which it would not 
lose as much as $5. 

The financial success of the bank led to competition, as the result of 
which it was obliged to reduce.its interest rate from 9 to 8 per cent. 

A most remarkable fact in connection with this bank is that the 
government of Egypt has never been called upon to pay upon its 
guaranty even so much as one penny. Meanwhile, the bank has been 
paying substantial dividends. 

Not only has the bank been of great assistance to the small landed 
proprietors and a pronounced financial success for its stockholders, but 
it has also been of powerful effect in improving the general condition 
of the Egyptian peasantry. Doctor Kemmerer, of Cornell Univer¬ 
sity, who was sent to Egypt by the Philippine government to investi¬ 
gate the workings of the Agricultural Bank of Egypt, testified before 
your committee that the condition of the fellaheen (Egyptian peasants) 
has improved greatly in recent years, the witness basing his statement 
upon interviews with people in Egypt whose opinions he deemed 
worthy of entire respect, and upon the remarkable degree in which 
the peasants have availed themselves of the privileges offered by the 
bank. Doctor Kemmerer said that he had repeated interviews with the 
Earl of Cromer, governor-general of Egypt, recognized the world 
over as one of the supremely great administrators of modern times, 
in which the Earl of Cromer gave it as his opinion that the bank had 
been an important factor in the uplifting of the Egyptian peasants. 

Secretary Taft, Governor Ide (late governor-general of the Philip¬ 
pine Islands), Professor Jenks, and Doctor Kemmerer, of Cornell 
University, and Mr. M. F. Lowenstein, of Castle Brothers, Wolf & 
Son, one of the largest business houses in the Philippines, were wit¬ 
nesses before your committee. Each is thoroughly familiar with con¬ 
ditions in the islands. Governor Ide for six years was a member of 
the Philippine Commission. For several months just prior to his 
recent departure from the Philippines he was governor-general. He 
is a very able lawyer and a conservative business man and has much 


392 AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 

practical knowledge of banking in the United States. Professor Jenks 
is professor of political economy in Cornell University. He has twice 
visited the Philippines—the first time when he went by appointment 
of Secretary of War Root as a special commissioner to visit the Eng¬ 
lish and Dutch colonies in the Orient and the second time as a member 
of the Commission on International Exchange, created by an act of 
Congress on recommendation of the President. Mr. Lowenstein is 
one of the most prominent and highly respected business men in the 
Philippines, and, at the same time, one of the most conservative. It 
is unnecessary to refer to Secretary Taft’s thorough familiarity with 
the needs of the Philippines. 

All of these witnesses are most urgent in declaring that an agricul¬ 
tural bank in the Philippines, which will afford facilities for small 
farmers to borrow money at a reasonable rate of interest, is an impera¬ 
tive necessity; and all of them agree also that it is impossible to get 
private capital to invest in such a bank in the Philippines without a 
guaranty as aforesaid by the Philippine government. In thus testi- 
f}ung these witnesses are only voicing the practically unanimous 
opinion and demand of the Filipino people themselves. On no other 
proposition are the Filipinos more insistent and united than in their 
demand for the establishment of an agricultural bank in the islands. 

In view of the urgent necessity for such a bank, the pending bill 
contains an alternative proposition providing that in case the Philip¬ 
pine government be unable by private capital to establish an agricul¬ 
tural bank the Philippine government itself may, under certain condi¬ 
tions, loan to farmers for agricultural purposes. Under this provision 
of the bill the Philippine government might organize an agricultural 
bank as a bureau of the government itself and experiment, as did the 
Egyptian Government, beginning tentatively by making small loans in 
a province or in provinces near Manila. If this experiment should 
result as did the one in Egypt, it would soon be easy to establish an 
agricultural bank by private capital, as provided in the pending bill. 

Your committee therefore respectfully recommend that the bill as 
amended do pass. 


59 ™,9? ngress ’ l HOUSE OE REPRESENTATIVES. (Rept. 7559, 
%a /Session. j 1 p ar t 2. 


AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 


February 7, 1907.— Committed to the Committee of the Whole House on the state 
of the Union and ordered to be printed. 


Mr. Crumpacker, from the Committee on Insular Affairs, submitted 
the following as the 

VIEWS OF THE MINOKITY. 

[To accompany H. R. 25186.] 

We regret our inability to concur in the report of the Committee 
on Insular Affairs recommending the passage of H. R. 25186, a bill to 
provide for the establishment of an agricultural bank in the Philippine 
Islands. 

The purpose of the bill is to authorize the incorporation of a com¬ 
pany to make loans to farmers in the Philippine Archipelago, under 
certain restrictions and limitations. In many places in the archipelago 
conditions are such that small farmers are the prey of the usurer. 
Titles are uncertain, collection laws and administration are not entirely 
satisfactory, and the standard of commercial honor in some communi¬ 
ties i3 not sufficiently high to be a dependable source of security. In 
many localities farm loans are small and rates of interest are inordi¬ 
nately high, in some instances reaching a hundred per cent per annum. 
It is the opinion of the Philippine Commission that if some provision 
could be made so that this class of agriculturists in the archipelago 
could procure small loans at a reasonable rate of interest it would 
greatly stimulate production and add much to the prosperity of the 
islands. 

It is claimed that conditions in the islands are similar to those that 
recently prevailed in Egypt, and that Lord Cromer, the English auto¬ 
crat of"Egyptian administration, established an agricultural bank for 
the people of that country and that it has proved a marked success. 
In the first place conditions'll! the Philippine Islands are fundamentally 
different from those that have prevailed in Egypt. In the latter 
country the population is, in a sense, compact, and farm lands are 
within a definite and well-known area, titles are stable, and lands have 
a fixed and permanent value. These conditions do not fully prevail 
in the Philippines and a policy that might be adapted to the needs of 
the people of Egypt might not be at all appropriate for the people of 
those islands. 


393 








394 AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 

The bill provides for the incorporation of a company authorized to 
loan money to farmers, giving a preference to small farmers, at a 
rate of interest not exceeding 10 per cent per annum, and it does not 
permit the company to make any loans excepting for the purpose of 
assisting agriculture. The company is not allowed to. invest any 
money it may have on hand in any way except in farm loans, not¬ 
withstanding it may possibly have large sums lying idle and for which 
there may be no demand for such loans. The bill describes the com¬ 
pany as a bank, but it does not possess a single banking feature. It 
is not permitted to do a banking business. It can not receive deposits 
of any kind nor sell bills of exchange, nor discount paper, nor make 
commercial loans. The company will be nothing but a farm loan com¬ 
pany without authority to invest any of its surplus money that may 
not be required for farm loans in any manner so as to increase its 
earnings. The bill provides that the Philippine government shall 
appoint two of the directors of the company, and that one government 
director shall be a member of every subcommittee of the board of 
directors. 

The bill authorizes the Philippine government to guarantee to the 
company an annual dividend of 4 per cent upon the average amount of 
money actually invested in farm loans, and it further authorizes pro¬ 
vincial and municipal officers of the government to assist the company 
in making loans, in examining securities, and so forth. The bill 
requires the company, out of its net earnings, to provide what is called 
a primary surplus fund equal to 25 per cent of the capital stock, and 
this primary surplus fund is not to be used for farm loans, but is to 
be invested in certain interest-bearing securities. The bill further 
provides for an increase of the surplus with a proportionate decrease 
of the rate of interest, and this increase of surplus and decrease of 
interest are automatic and compulsory, so that when the surplus of 
the company shall be increased to the amount of the capital the rate 
of interest on loans shall not exceed 6 per cent. 

Under present conditions loan companies can engage in the. business 
of loaning money on farm and other securit}^ in the archipelago with¬ 
out any limitation or restriction, either as to amounts loaned, the 
character of the loan, or the rate of interest, and it seems to me that 
if it were otherwise advisable, the provision made by the bill for 
government support of the loan company is clearly insufficient to 
induce any company to engage in the business. The guaranty of 4 per 
cent dividends is limited to the amount of money actually invested in 
farm loans, and the amount that the government may be required to 
pay out under the guaranty provision shall constitute a contingent 
liability against the company and a lien upon its assets. Securities 
are to be carefully examined and not exceeding a certain per centage 
of the fair cash value of lands shall be loaned, and no loan shall be 
made excepting where titles are good. The guaranty does not cover 
the capital stock of the company or the amount actually paid in upon 
the capital. 

The company, in making provision for a possible demand for loans, 
can not foretell exactly what that demand may be. It is authorized to 
have branch offices in all parts of the archipelago, and in providing a 
fund to loan it may be that a considerable portion of that fund will be 
idle a good share of the time, earning no interest or income whatever. 
The company can not do a banking business; it can have no source of 


AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 395 

income at all excepting what it receives from loans of that portion of its 
paid-up capital that it can place upon farm lands. The expense of 
administering the affairs of a company of that kind and the risk of hav¬ 
ing a considerable portion of its loanable fund idle and earning nothing 
are such that there does not seem to be any prospect whatever of induc¬ 
ing men with capital to organize under the law. 

YY hilethe Philippine Commission seems quite anxious for the authori¬ 
zation of such a company, it is a matter of doubtful policy upon general 
principles. Regular banking institutions are so closely allied to gov¬ 
ernmental functions that they are controlled in a large measure by 
general law, and in some instances are conducted by governments 
themselves, but never in the history of this country has their been 
Government aid and support given to a loaning establishment pure and 
simple. W hile it is desirable to have conditions so certain and stable 
that money will find its way into agricultural communities throughout 
the archipelago, where it can be loaned at a reasonable rate of interest, 
yet for the Government to loan its credit and its influence to a company 
of that kind is a signal departure from usages of the American people. 

It would be highly desirable to have mercantile establishments in 
all communities throughout the archipelago that would carry an ade 
quate supply of the comforts and necessaries of life and sell them at 
reasonable prices, yet if it be true that concerns of that character in 
many places exact exorbitant prices for their wares, it would hardly 
justify the government in guaranteeing dividends to one large mer¬ 
cantile establishment, with branch stores in the various communities 
throughout the archipelago, that would undertake and agree to sell its 
goods at “ grangers’ profits.” The business of loaning money is purely 
a private business, and there is serious doubt about the advisability of 
the government connecting itself with it in any way, shape, or form. 

But this bill really means government loans of public money, for, 
in our judgment, it will be impossible to secure the incorporation of 
a private company to carry out its provisions. The last section of the 
bill provides that in the event that individuals will not incorporate 
under the law the government itself may appropriate public money 
belonging to the government, to be loaned for agricultural purposes 
under the provisions of the bill, and that the government shall estab¬ 
lish what is termed u The Philippine Agriculture Bank,” which shall 
be a bureau of the government and shall be administered by govern¬ 
ment officers. The amount of money that may be thus loaned is limited 
to the amount of seigniorage resulting from the recoinage of the silver 
coins, and which, we understand, amounts to something over five mil¬ 
lion dollars. The necessary effect of the bill will be the creation of an 
additional bureau in the government to be known as “ The Philippine 
Agriculture Bank Bureau,” and the people of the archipelago will be 
taxed to secure money to loan out to the farmers in all parts of the 
islands. * 

This, in our judgment, is an indefensible provision. Government 
officers, who perform their duties, many of them, in a perfunctory 
way, and whose only interest in their work is the salary they receive, 
will not have that personal sense of responsibility in loaning the pub¬ 
lic money to prompt them to negotiate safe and prudent loans, as 
would be the case with a company loaning its own money and stand¬ 
ing for losses that might result from bad loans. It is paternalism in a 
form far beyond that which has ever been recognized in this country. 


396 AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 

It is akin to the policy that was urged by the populists in several of 
the States a number of years ago—that of printing greenbacks and 
loaning them to the farmers at a low rate of interest without limit or 
restriction. It is a perversion of the natural and legitimate functions 
of government. 

The Government has no more right to go into the business of taxing 
the people for the purpose of securing a fund to loan out for purely 
private purposes, than it has to tax the people for the purpose of 
establishing and maintaining hotels, manufacturing plants, and mer¬ 
cantile institutions. This Government hopes to establish and main¬ 
tain an ideal system of administration in the Philippine Islands, based 
upon the most intelligent and modern conception of the true aims and 
purposes of government. The people in those islands in years past 
have been taught to depend too much upon government—ecclesiastical 
and temporal—and too little upon their own resources, and we are not 
prepared to assist in the enactment of a law that will still extend the 
agencies of government beyond that which has ever been seriously pro¬ 
posed before. 

The people in the islands, as a rule, are poor. Their earning capacity 
is small, and what they need most is not more government, not addi¬ 
tional bureaus, not higher taxation, but a plain, simple, stable govern¬ 
ment, as inexpensive as possible, but one that will establish security 
of life and property throughout the archipelago, with a just and effi¬ 
cient system of enforcing the performance of financial obligations. 

There ought to be suitable registration laws, so as to secure stability 
of titles; there ought to be good collection laws and administrative 
agencies adequate to carry them into satisfactory execution. Practi¬ 
cable and simple provisions like these, as inexpensive as may be, will 
tend more toward distributing loanable capital into communities where 
it nnty be needed than will the creation and guaranteeing by the gov¬ 
ernment of private loaning companies. Money will go where it can 
find safe and profitable investment. 

The government has already undertaken to guarantee dividends 
upon railroads; it has issued several million dollars of bonds for inter¬ 
nal improvements; it has issued seven or eight million dollars of bonds 
for the purchase of the Friar lands. All of these provisions were 
probably necessary and proper, but it ought not now to still further 
increase the burden of taxation to create a fund to loan out for pur¬ 
poses that are purely of a private nature. We do not mean to say we 
would oppose a reasonable bill authorizing the establishment of an 
agricultural bank in the archipelago; that is, a bank authorized to re¬ 
ceive savings and time deposits and authorized to loan money upon 
farm security; and we might not object to the government furnishing 
some assistance to an institution of that kind, in view of the peculiar 
conditions prevailing in the islands, but we do most seriously oppose 
the passage of the pending bill—a bill that authorizes the creation of a 
private loaning company under limitations and restrictions that will 
defeat its very purpose, and then, as a contingent alternative proposi¬ 
tion, authorizes the government itself to go into the business of loan- 
ing government money for private purposes. 

Respectfully submitted. 

E. D. Crump acker. 

M. E. Olmsted. 

E. L. Hamilton. 

Wm. H. Graham. 


AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 897 

While agreeing with the general purposes of the bill referred to in 
the foregoing minority report, I dissent from the conclusion of the 
majority so far as concerns the contingent alternative proposition for 
authorizing the Philippine government to enter upon the business of 
lending government funds for private use. 

E. H. Hubbard. 


59th Congress, ) HOUSE OF REPRESENTATIVES. JRept.7559, 
2d Session. | ( Part 3. 


AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 


February 12, 1907.—Committed to the Committee of the Whole House on the state 
of the Union and ordered to be printed. 


Mr. Jones, of Virginia, from the Committee on Insular Affairs, sub¬ 
mitted the following as the 

VIEWS OF THE MINORITY. 

[To accompany H. R. 25186.] 

The undersigned members of the Committee on Insular Affairs, to 
whom was referred the bill (H. R. 25186) to provide for the establish¬ 
ment of an agricultural bank in the Philippine Islands, are unable to 
assent to the report accompanying said bill. 

It is undeniably true that the most immediate and pressing of the 
many needs of the people of the Philippines is the establishment of 
some kind of a banking institution through which those engaged in 
agricultural pursuits may obtain, upon fair and reasonable terms, the 
money with which to carry on their small farming operations. The 
banking facilities of the islands are extremely limited, and such as 
actually exist are confined to the city of Manila. That they are totally 
inadequate to the needs of the farming communities throughout the 
various outlying provinces, goes without saying. It follows that 
from the very necessities of this situation there are no‘laws against 
usury, and interest charges in many localities range from 2 to 10 per 
cent a month. As a whole the Filipino people, especially those en¬ 
gaged in farming, are abjectly poor. Despite the efforts in that direc¬ 
tion, it has been found impossible to check the ravages of the rinder¬ 
pest and other cattle diseases, and the testimony on that subject shows 
that the carabaos, and other work cattle, are dying faster than ever 
before. Locusts, droughts, and destructive typhoons, to say nothing 
of the ruin and want entailed by war and pestilence, have all contrib¬ 
uted to the well-nigh intolerable burdens of this unhappy people. 
To enable the Filipino farmer to purchase work cattle, farming imple¬ 
ments, and seeds, as well as to free himself from the cruel clutches of 
the usurers who infest the islands, there is imposed upon the Govern- 
398 





AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 399 

ment the sacred duty and moral obligation of providing the only 
means which all agree can afford immediate relief. 

Ihere are, in our opinion, a number of weighty arguments which 
would not apply to continental United States, but which may be urged 
in favor of the establishment by the Philippine government of an 
agricultural bank, to be operated with government funds and with 
the single object of advancing the interests of agriculture, rather 
than an agricultural bank operated by private individuals, with private 
capital and for private gain, with a government guaranty of 4 per 
cent of interest. In the first place, it is more than doubtful if private 
capital can be induced to embark in an enterprise of such a character— 
an agricultural bank—the only function of which is to loan money for 
agricultural purposes, and which is expressly prohibited from doing 
a general banking business. Moreover, conceding for the sake of the 
argument that the necessary capital can be secured from private 
sources, it will be a question of much time, and what is most needed 
is certain and immediate relief. But even if we had the most reliable 
assurance that private capital could easily and readily be induced to 
go to the Philippines for this purpose, we would still be of the opinion 
that a purely governmental institution, administered through govern¬ 
ment agencies, would far better subserve the ends so greatly to be 
desired. A bank conducted solely for private gain would naturally 
favor the large landholder, as against the small or nonlandholder, 
while a sound public policy would dictate giving aid where aid was 
most needed. 

The Philippine government, fortunately, is in a position financially 
to establish such a bank as is here favored. At the beginning of the 
present fiscal year it had in its treasury a net surplus, after meeting 
every current obligation, of a million and a half dollars in gold. In 
addition, as a result of the recoinage of the Philippine silver coins 
authorized by the act of Congress approved June 23,1906, there is in 
the Philippine treasury, in round numbers, $2,000,000 as seigniorage, 
and it is estimated by the Philippine Commission that when recoinage 
has been fully accomplished there will be a further profit to the gov¬ 
ernment of between $5,000,000 and $6,000,000 in gold. These sums 
constitute a much larger fund than will, in all human probability, be 
required for many years to come to finance a government agricultural 
bank. 

If a government bank is objected to on the score of paternalism, it 
may be replied that the theory upon which the Philippine government 
is founded is imperialistic and that, therefore, in its administration it 
must necessarily be paternalistic. There has recently been established 
in the Philippines a savings bank in connection with the postal ser¬ 
vice and the Philippine government is to-day successfully operating, 
in competition with private concerns and at a handsome profit, a cold- 
storage and ice plant. It has, too, for years been conducting civil com¬ 
missary stores, disposing of its wares at a profit of 10 per cent above 
cost, and it is also operating interisland transportation lines. If the 
Philippine government can go into the manufacturing, mercantile, and 
transportation business on its own account, we fail to discover any 
good reason why it can not establish and operate, with its own funds 
and through its own agencies, an agricultural bank. Moreover, the 
bill favored by the committee provides in the alternative for a govern¬ 
ment bank. 


400 AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 

Believing, therefore, that this bill will not afford that immediate 
and certain relief which is so imperatively demanded by the deplorable 
financial and agricultural conditions which exist throughout the Phil¬ 
ippine Archipelago, the undersigned minority members file herewith, 
as more fully embodying their views, the draft of a bill which they 
recommend shall be substituted for that presented with the report of 
the committee. 

W. A. Jones, of Virginia. 

W. T. Zenor. 

W. W. Rucker. 

Robert N. Page. 

Finis J. Garrett. 


A BILL To encourage agriculture in the Philippine Islands by providing that the Philippine gov¬ 
ernment may loan to agriculturists in said islands a fund equal in amount to the net seigniorage 
profit derived by the Philippine government from the recoinage of certain coins. 

Whereas industrial and financial conditions in the Philippine Islands are such as to 
render necessary such proper legislation as may aid in their relief by enabling those 
engaged in agricultural occupations to secure funds for acquiring and improving 
lands, and planting, growing, harvesting, and marketing crops; and 
Whereas no declaration of the purpose of the Government of the United States with 
respect to the ultimate disposition of said islands has yet been made; and 
Whereas it is the purpose of the United States to so legislate in all matters affecting 
said islands and the people thereof as will create the few r est possible connections 
and institutions whose interests will impede, hinder, or embarrass them in dispos¬ 
ing of same in any manner just to them and in accord with the spirit of the insti¬ 
tutions of the United States; and 

Whereas, by the recoinage of Spanish-Filipino, Chinese, Mexican, and other coins, 
the Philippine government derived a net seigniorage profit down to the end of the 
fiscal year nineteen hundred and six, of approximately two million six hundred 
and ninety-one thousand nine hundred and eleven pesos, and will, it is believed, 
within a few years derive a total seigniorage profit of approximately twelve million 
pesos; and 

Whereas this seigniorage profit may properly be utilized for loans to the people of 
those islands for the purposes hereinbefore declared necessary in such manner as 
will assure its reaching those classes and interests most needing relief and be loaned 
wholly for the purposes of relieving and improving industrial conditions and not 
for the purposes df profit, as must be the case with any institution supported by 
private capital; and 

Whereas this said fund will be sufficient for a number of years to meet, in large 
measure, the demands growing out of existing financial and industrial conditions, 
and will bring relief to the people without embarrassing the United States in their 
present or future relations to the Philippine Islands: Now, therefore, 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled , That the Philippine government be, and it is authorized to, 
from time to time, appropriate out of the funds in the Philippine treasury an amount 
not in excess of the amount of the net seigniorage profit standing to the credit of said 
.government at the times of said appropriations, which funds so appropriated shall 
be loaned under the provisions and regulations of this act. 

Sec. 2. That the secretary of finance and justice, under the general direction of 
the Philippine Commission, shall have immediate supervision of the loans made 
under the authority hereof and the appointment, with the approval theVeof, of the 
officials and agents employed in connection with the same, and the Philippine gov¬ 
ernment shall fix the compensation of said officials and agents. 

Sec. 3. That the Philippine Commission shall have authority— 

(a) To establish and locate offices in the various provinces and islands comprised 
in the Philippine Archipelago sufficient in number to expeditiously and conveniently 
carry out the purposes of this act and secure to the inhabitants of said islands the 
benefits of same, and said Commission may from time to time establish new offices 
and discontinue others when in its sound discretion same may be necessary. 

(b) To allot among the several provinces and islands such proportions of the fund 
herein authorized to be loaned as will most nearly and equitably meet the demands 



AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 401 


of the respective sections, which allotments may be increased or diminished by 
fr ° m 5 ne .^ u an °ther as, in the discretion of said Philippine Commis- 
the whole l people )erand W1 best lnsure tbe diffusion of the benefits of this act among 

(c) To make and enforce rules and regulations for— 

First. Advertising the loans. 

Sec°nd. The investigation of values of securities offered. 
suchapplications^ 0 ^ a PP bca ^ on * or l° ans and the forms to be used in making 

£^ th ™ The reT ^ wal of loans an . d the extension of dates of repayment. 
q. xt communication to borrowers of statements of their accounts, 

sixth. .Notifications to borrowers with reference to changes, actual or prospective, 
m an > r property mortgaged or pledged as security for loans or in the lien thereon such 
as may be liable to impair the value of the mortgage or pledge as security. 

Ro-iron+Vi The registration or recording of the mortgage, pledge, or other evidence 


of security. 

Eighth. The collection of interest on loans made and of the principal of such 
loans. - 


Ninth. The reports, regular and special, of officials and agents employed in t. on- 
nection with such loans. 

Tenth. The annual statement; its character in detail. 

Eleventh. Such other matters as may be considered necessary and desirable. 

The rules and regulations may be varied in detail to suit the conditions and require¬ 
ments in the respective islands and provinces: Provided, That they shall all be at all 
times in accord with the provisions of this act. 

Sec. 4. That the loans made under the provisions of this act shall be of three 
classes, to be known as loans of the first class, loans of the second class, and loans of 
the third class, respectively. 

Loans of the first class shall comprise those the principals of which shall be not 
less than one thousand pesos and not more than five thousand pesos. 

Loans of the second class shall comprise those the principals of which shall be not 
less than two hundred pesos and not more than one thousand pesos. 

Loans of the third class shall comprise those the principals of which shall be 
less than two hundred pesos: Provided, That no loans shall be made the principals 
of which shall be less than twenty pesos nor more than five thousand pesos; And 
provided further, That not more than one-fourth of the total amount subject to be 
loaned under the provisions of this act shall be at any one time outstanding in loans 
of the first class: And provided further, That in making said loans especial attention 
and favor shall be accorded applications of small farmers for loans of the second and 
third classes, the proceeds of which are to be used in agricultural work. 

Sec. 5. Loans made upon personal security or upon other than real estate security 
shall not exceed two hundred pesos in amount, but loans of all classes may be made 
on real estate security. The Philippine Commission shall provide what loans must 
be approved by the secretary of finance and justice before being contracted. 

Sec. 6. That each officer and agent employed under the secretary of finance and 
justice for carrying out the provisions of this act who will have the custody or con¬ 
trol of any portion of the funds shall be required to enter into bond in such amount 
and so conditioned as will insure said government against loss on account of negli¬ 
gence, fraud, dishonesty, or other cause on the part of such officer or agent; and the 
Philippine Commission may also require bond of any officer or agent who may be 
engaged or employed by it to secure the taking of loans or to investigate the title or 
value of securities offered, so as to insure the government against loss on account of 
any act of nonfeasance, misfeasance, or malfeasance on the part of such officer or 
agent. 

Sec. 7. That the Philippine government shall make provision by statute for the 
enforcement of all liens it may acquire as security for loans upon default in payment 
on the part of the borrower, and is required to provide the method of enforcement 
which will be, in its sound discretion, least onerous and costly for effective adminis¬ 
tration; and in all cases where real estate shall become forfeited a time for redemp¬ 
tion shall be allowed the owner thereof equal at least to the time allowed for redemp¬ 
tion in cases where lands are forfeited for nonpayment of taxes. 

Sec. 8. That the Philippine Commission may make rules and regulations for the 
repayment of loans by annuities covering principal and interest, but no loan of the 
first class shall run for a period of more than five years, no loan of the second class for 
a period of more than two years, and no loan of the third class for a period of more 
than one year. 

Sec. 9. That interest shall be collected at the rate of not more than ten per centum 
per annum on the amounts of the respective loans made under the provisions of this 


35815—08-26 


402 AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 

act, and there shall be no discrimination between borrowers as to interest rates. 
Out of the interest collected there shall be paid all the expenses incident to the admin¬ 
istration of the act, including all salaries and compensation to officers and agents 
employed: Provided , That the government may make appropriations in advance of 
the collection of interest to pay such salaries as may have to be paid, which amounts 
shall be replaced in the treasury from the interest collected as rapidly as same becomes 
available. After deducting all costs and expenses any balance of the interest funds 
which remains shall be added to the principal herein provided, to be loaned and be 
subject to be loaned as a part of the principal. The rate of interest shall be reduced 
in the following manner: 

As soon as there shall have been collected as interest an amount sufficient, when 
added to the interest upon outstanding loans of the solvency of which there is no 
doubt, to cover all expenses incident to the loans and to make certain that the future 
expenses will be covered by a fund which will be derived from a lower rate of inter¬ 
est, then the rate upon all outstanding loans and upon new loans shall be reduced to 
a per centum which will be just sufficient to insure the payment of said expenses, 
with a reasonable allowance for contingencies; it being the purpose of this act to 
insure to the people of the Philippine Island the use of this money at the actual 
cost of its administration hereunder: Provided, however , That the reduction of the 
interest rate herein provided for is declared to be an administrative act to be exer¬ 
cised by the Philippine Commission and the obligations of the contract of loan as 
expressed in the face thereof shall be binding upon the debtor, except as the same 
may be modified by reduction of the interest rate upon the initiative of the Philip¬ 
pine Commission. 

Sec. 10. That the Philippine Commission shall be permitted, on the approval in 
each instance of the treasurer of the Philippine Islands, as to character and reliability, 
to utillize the services of any of the provincial treasurers of said islands, and any of 
the municipal treasurers in their capacity as deputies of the provincial treasurers, in 
advertising said loans, securing applications therefor, and in collecting same. Col¬ 
lections made by such provincial and municipal treasurers shall, as far as practicable, 
be made at the times when the regular taxes of said provinces or muhicipalities are 
collected, and in connection therewith. Bonds shall be required of such officials as 
provided in section six of this act, and they shall be required to make all regular 
and special reports necessary. 

Sec. 11. That an annual report covering the details shall be made by all officials to 
the secretary of finance and justice, together with such special reports as may from 
time to time be required, and the secretary of finance and justice shall report as a 
part of his report to the Philippine Commission a statement as to the conditions and 
working of this act. 

Sec. 12. That this act shall take effect from and after its passage. 




VIEWS OF G. G. GILBERT. 

Speaking for myself alone, I do not approve of either the bill 
reported by the majority of the quorum who were present when the 
bill was acted on, nor do I approve fully of the bill or report signed 
by the minority. Still I think the substitute bill is better than the 
original. It will do less harm, and, as a temporary measure affording 
temporary relief, not to be construed into a permanent policy of this 
Government or of the Philippine government, I am willing to vote 
for the substitute bill. The bill presented by the majority looks to 
the establishment of an agricultural bank and branches thereof in the 
Philippine Islands, and the Philippine government can guarantee the 
payment of 4 per cent annual dividends. This bank is to be estab¬ 
lished ostensibly for the purpose of enabling the poor farmers who 
are peasant farmers to purchase seeds and stock and farming imple¬ 
ments and other necessary articles to be used in the cultivation of 
their farms. The bank proposed is to be modeled somewhat after 
certain banking institutions that have been established by the English 
Government in Egypt. The proof is abundant that similar banks on 
the Nile have been successful from the standpoint of the bank; but 
there is no satisfactory proof that these banking institutions have 
benefited the Fellahin of Egypt or other poor people among whom 
the institutions have been located. 

1 do not doubt that the proposed bank in the Philippine Islands will 
also be successful, looked at from the standpoint of the bank. This 
bank will be backed by the guaranty of the Government of 4 per cent 
per annum dividends, while the loans made by the bank to the people 
are to be secured by mortgages on their farms bearing 8 per cent per 
annum interest. I do not believe it would be wise to follow in the 
footsteps of England’s colonial policy, and judging from the conditions 
that we find among the masses of the people in India and Egypt after 
years of English tinkering and misrule, we should steer as far as pos¬ 
sible from repeating the mistakes of that country. Besides, I do not 
believe it to be wise on general principles to afford the ignorant and 
improvident inhabitants of the Philippine Islands additional oppor¬ 
tunities for becoming involved in debt, nor do I believe it wise to pre¬ 
sent to them additional temptations to mortgage their homes. The 
more ignorant and improvident a people are the more difficult it should 
be for them to borrow money and the fewer opportunities and tempta¬ 
tions should be presented to them for becoming involved in debt. The 
usurer can be very easily regulated by penal and other statutes, and 
we should not allow a governmental institution to take the place of the 
usurer. 

I am afraid that the temptations of the small farmer to buy more 
plows and farming implements of all kinds than he needs will be 
increased, and I am afraid that he will be tempted to buy many things 

403 


404 AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 

he does not need, and that the temptation of the bank and its officials 
to lend money as long as the security will be good will be too great to 
be resisted. And while the bank will afford some temporary relief it 
will, in thh long run, and in the end, prove to be a great financial institu¬ 
tion; will take the place of the friars, and it will eventually own the 
homes that now belong to the people themselves—homes that, without 
the bank, these poor people will continue to own. These poor people 
will struggle along without any mortgages on their homes and gradu¬ 
ally work out their present financial distress, and, thrown upon their 
own resources, they will learn by experience a degree of thrift and 
economy that will be postponed as long as they can get money from 
the bank. That experience and that economy must in the end be 
learned by these people themselves. And the bank will postpone that 
day and increase the burden. 

I know that this argument would not, perhaps, be regarded as sound 
if the bank was intended for level-headed experienced business people. 
But it is addressed to you, who must consider the characteristics of 
the Philippine people. The proof shows that these people are mere 
children in business; that they will gladly borrow money and mortgage 
their homes in order to have a spectacular feast, or in order to have a 
great funeral procession, or in order to get up a great wedding with a 
show and parade, or for any other absurd or childish purpose. So, if 
the Fillipino really needs a plow, the agent of the bank could easily 
induce him to mortgage his home for half a dozen plows, and so on 
down the line, with wagons, farming implements, and stock of all kinds. 
He will buy these in great abundance and mortgage his home to secure 
the payment of the debt. 

Placing one of these agricultural banks among the Fillipino, tempt¬ 
ing him to borrow money and to mortgage his home, is just as absurd 
as to turn a child loose in a toyshop with the privilege and encourage¬ 
ment to purchase anything and everything his childish fancy desires, 
and then taking a mortgage upon the patrimony of this child to secure 
the debt of the shopkeeper. I do not care to elaborate these facts 
any further. 

I do not concur in the reasoning of the minority report and am not 
very well pleased with the substitute bill itself, butj as I say, owing to 
the unusual distress in those islands, I do concur in the conclusion 
reached by the report of the minority, and agree to vote for the sub¬ 
stitute bill and recommend it in preference to the report or the bill 
presented by the majority. 


G. G. Gilbert. 




5 9 th Congress, ) HOUSE OF REPRESENTATIVES. ( Report 

U fam ) _ | No. 8115. 


ESTABLISHMENT OF AN AGRICULTURAL BANK IN THE 
PHILIPPINE ISLANDS. 


February 27, 1907.—Committed to the Committee of the Whole House on the state 
of the Union and ordered to be printed. 


Mr. Crumpacker, from the Committee on Insular Affairs, submitted 

the following 

REPORT. 

[To accompany S. 6249.] 

The Committee on Insular Affairs, to whom was referred the bill 
(S. 6249) to provide for the establishment of an agricultural bank in 
the Philippine Islands, beg leave to report that they have had the same 
under consideration and recommend that said bill do pass with the 
following amendments, to wit: 

In line 13, page 2, strike out the word “four” and insert “two” 
in its place. 

In line 9, page 3, after the word “upon” insert “and be paid out 
of,” so that said bill, when amended, will read as follows: 

AN ACT To provide for the establishment of an agricultural bank in the Philippine Islands. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled , That for the purpose of aiding in the establishment and opera¬ 
tion of such an agricultural bank in the Philippine Islands as the general government 
thereof may hereafter specifically authorize the Philippine government is empowered 
to guarantee an income of not exceeding four per centum per annum upon cash capi¬ 
tal actually invested by individuals or corporations in such agricultural bank; such 
guaranty shall be granted by an act of the Philippine Commission which shall con¬ 
tain, among others, the following provisions: 

First. The guaranty shall be made to a company organized under the laws of the 
Philippine. Islands, with its principal office in Manila and with branches in such parts 
of the islands as may be designated by the Philippine Commission. 

Second. The bank shall not grant loans except to those engaged in agriculture and 
with the sole purpose of assisting agriculture in the Philippine Islands. 

Third. No loan exceeding in amount five thousand dollars shall be made except 
upon the written authorization of the secretary of finance and justice of the Philip¬ 
pine Islands. 

Fourth. Interest charged on loans shall not exceed ten per centum per annum: 
Provided , That in no*event shall the total annual contingent liability under the 
guaranties authorized by this act at any time exceed two hundred thousand dollars, 
and no such guaranty shall continue for a longer period than twenty-five years. 

405 









406 AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS* 


. For the further security of the Philippine government said government shall pro¬ 
vide by the aforesaid act proper rules, including those for determining the cash cap¬ 
ital actually invested in such bank and the net income actually received on said 
capital so invested, and shall, pro vide for supervision by said Philippine government, 
through the auditing and othei appropriate bureaus thereof, of the conduct of the 
business of the bank. 

The bank shall make such reports from time to time as to its receipts and expendi¬ 
tures in such form and substance and sworn to by such officials as may be prescribed 
by the Philippine government, and its books and accounts shall be at all times open 
to inspection by any authorized agent of the Philippine government. 

Sec. 2. That money paid by the Philippine government pursuant to the aforemen¬ 
tioned guaranty shall be a liability of the bank to the Philippine government, and, 
as such, shall constitute a lien upon and be paid out of the annual net profits 
of the bank, subject only to the right of the stockholders to receive therefrom 
four per centum dividends per annum upon the bank’s cash paid-up capital stock. No 
dividends above four per centum shall be paid, and no profits credited to the sur¬ 
plus fund, either during the period of the government’s guaranty or subsequent 
thereto, until the Philippine government shall have been repaid in full all sums 
advanced to the bank under said guaranty. 

Obligations of the bank to the Philippine government arising from advances made 
pursuant to the aforementioned guaranty and existing at the time when the bank 
shall go into liquidation shall constitute a lien on the bank’s assets, subject only to 
the payment of the bank’s legitimate debts and the repayment to the stockholders 
of the par value of the bank’s duly authorized cash paid-up capital stock: Provided , 
That nothing in this section shall be interpreted as a guaranty on the part of the 
Philippine government to the stockholders of the bank of the par value of the bank’s 
cash paid-up capital stock when the bank shall go into liquidation. 

Sec. 3. That the bank shall not be permitted to hold real estate beyond that 
required for business premises: Provided , That the temporary acquisition of land as 
the result of foreclosure, or otherwise, on account of a debt, shall be permitted on 
condition that land so acquired shall be sold within ten years from the date of acqui¬ 
sition, and all said lands not so alienated in good faith shall be forfeited to the 
Philippine government. 

The bill authorizes the Philippine government to establish an agri¬ 
cultural bank in the islands, with its main office at Manila and with 
branch offices in such parts of the islands as may be designated by the 
Philippine Commission. The government is empowerad to guarantee 
an income of not exceeding 4 per cent per annum upon the cash 
capital actually invested in such agricultural bank, on condition that 
the bank loans shall be made only to those engaged in agriculture and 
with the sole purpose of assisting agriculture in the archipelago, and 
that no loan shall exceed $5,000 in amount, except upon written 
authorization of the secretary of finance and justice of the govern¬ 
ment, and that the rate of interest shall not exceed 10 per cent per 
annum. 

The bill limits the total annual contingent liability under the guar¬ 
anty provision to $200,000, and limits the term for which guaranties 
may run to twenty-five years, and also provides satisfactory methods 
for ascertaining the amount of cash capital actually invested and the 
net income resulting from the bank’s business. It provides also that 
all net profits of the bank above 4 per cent, which may be paid to the 
stockholders as dividends, shall be applied to the payment of any 
liability to the government on account of the guaranty provision, 
until such liability is extinguished. It further provides that the bank 
shall not own real estate, excepting such as ma} 7 be necessary for its 
business, and that temporary acquisitions of land resulting from the 
enforcement of collections, shall be permitted on condition that the 
land shall be disposed of within ten years after the title has been 
acquired. 






AGEI CULT URAL BANK IN THE PHILIPPINE ISLANDS. 407 

The enactment of the bill is earnestly and urgently recommended by 
the Philippine Commission and by the Secretary of War. The agri¬ 
cultural interests in the archipelago are notin a satisfactory condition, 
owing largely to the inability of small farmers to secure loans for the 
purchase of seed and farm implements at reasonable rates. The small 
farmers in the interior are the prey of usurers. Rates of interest are 
exorbitant and often ruinous, reaching in some instances 100 per cent 
per annum. It is the belief of the Commission that an agricultural 
bank authorized to make small farm loans at moderate rates of inter¬ 
est would greatly stimulate agriculture and add much to the prosperity 
of the people of the archipelago. The Philippine government some 
time ago sent Professor Kemerer, of Cornell University, to Egypt to 
investigate the organization and the business of the agricultural bank 
of Egypt that was instituted at the direction of Earl Cromer in 1902. 
Professor Kemerer appeared before the Committee on Insular Affairs 
and made an elaborate report of his investigation, which was highly 
favorable to ttie Egyptian bank. From his statement that bank has 
been a marked success, and it has greatly promoted the welfare of the 
small farmers in Egypt. It has reduced interest rates throughout 
that country, and the product of the farm has been materially 
enhanced by improved methods of agriculture and by the stimulant to 
industr}^ that bank loans at low rates of interest have afforded. 

The proposition to establish such a bank in the Philippine Islands is 
a departure from the financial methods of the American people, but 
conditions in the archipelago are exceptional andean not be determined 
by standards in this country. It is necessary in order that the admin¬ 
istration of those islands shall be successful that this Government very 
largely defer to the judgment and recommendations of those.who are 
directly charged with responsibility, and who live in the islands and 
know personally the condition and needs of the people. The Congress 
of the United States can never be sufficiently informed respecting con¬ 
ditions in the Philippine Archipelago to enact in detail legislation cal¬ 
culated to meet the demands and the needs of those people. 

Your committee recommend the bill because from its provisions 
it may operate successf ully^ and because of the very earnest and insist¬ 
ent advocacy of the bill by the Philippine Commission and the Secre¬ 
tary of War. Whether an agricultural bank in the islands, created 
under the provisions of the bill, will be the unqualified success that the 
Egyptian agricultural bank has been is uncertain, of course. The 
project will be somewhat speculative, but the prospect of good coming 
to the people of the islands as a result of such an establishment would 
seem to justify the Philippine government in making the experiment. 

Your committee believe that the probabilities are that the bank will 
be a success and that the experiment is worth while. 


[Public —No. 243.] 

An Act To provide for the establishment of an agricultural bank in 
the Philippine Islands. 

Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled , That for the purpose of aid¬ 
ing in the establishment and operation of such an agricultural bank in 
the Philippine Islands as the general government thereof may here¬ 
after specifically authorize the Philippine government is empowered 
to guarantee an income of not exceeding four per centum per annum 
upon cash capital actually invested by individuals or corporations in 
such agricultural bank; such guaranty shall be granted by an act of 
the Philippine Commission which shall contain, among others, the 
following provisions: 

First. The guaranty shall be made to a company organized under 
the laws of the Philippine Islands, with its principal office in Manila 
and with branches in such parts of the islands as may be designated 
by the Philippine Commission. 

Second. The bank shall not grant loans except to those engaged in 
agriculture and with the sole purpose of assisting agriculture in the 
Philippine Islands. 

Third. No loan exceeding in amount five thousand dollars shall be 
made except upon the written authorization of the secretary of finance 
and justice of the Philippine Islands. 

Fourth. Interest charged on loans shall not exceed ten per centum 
per annum: Provided , That in no event shall the total annual con¬ 
tingent liability under the guaranties authorized by this Act at any 
time exceed two hundred thousand dollars, and no such guaranty shall 
continue for a longer period than twenty-five years. 

For the further security of the Philippine government said govern¬ 
ment shall provide by the aforesaid act proper rules, including those 
for determining the cash capital actually invested in such bank and 
the net income actually received on said capital so invested, and shall 
provide for supervision by said Philippine government, through the 
auditing and other appropriate bureaus thereof, of the conduct of the 
business of the bank. 

The bank shall make such reports from time to time as to its 
receipts and expenditures in such form and substance and sworn to by 
such officials as may be prescribed by the Philippine government, and 
its books and accounts shall be at all times open to inspection by any 
authorized agent of the Philippine government. 

Sec. 2. That money paid by the Philippine government pursuant to 
the aforementioned guaranty shall be a liability of the bank to the 
Philippine government, and, as such, shall constitute a lien upon and 
be paid out of the annual net profits of the bank, subject only to the 
right of the stockholders to receive therefrom four per centum divi¬ 
dends per annum upon the bank’s cash paid-up capital stock. No 
dividends above four per centum shall be paid, and no profits credited 
to the surplus fund, either during the period of the government’s 

408 




AGRICULTURAL BANK IN THE PHILIPPINE ISLANDS. 409 


guaranty or subsequent thereto, until the Philippine government shall 
have been repaid in full all sums advanced to the bank under said 
guaranty. 

Obligations of the bank to the Philippine government arising from 
advances made pursuant to the aforementioned guaranty and existing 
at the time when the bank shall go into liquidation shall constitute a 
lien on the bank’s assets, subject only to the payment of the bank’s 
legitimate debts and the repayment to the stockholders of the par value 
of the bank’s duly authorized cash paid-up capital stock: Pi'ovided , 
That nothing in this section shall be interpreted as a guaranty on the 
part of the Philippine government to the stockholders of the bank of 
the par value of the bank’s cash paid-up capital stock when the bank 
shall go into liquidation. 

N Sec. 3. That the bank shall not be permitted to hold real estate 
beyond that required for business premises: Provided , That the tem¬ 
porary acquisition of land as the result of foreclosure, or otherwise, 
on account of a debt, shall be permitted on condition that land so 
acquired shall be sold within ten years from the date of acquisition, 
and all said land not so alienated in good faith shall be forfeited to the 
Philippine government. 

Approved, March 4, 1907, 10 a. m. 


59th Congress, ) HOUSE OF REPRESENTATIVES. f Report 
2 d Session . ) 1 No. 8118. 


BETTER SYSTEM OF REPORT AND ACCOUNTABILITY BY 
GOVERNMENTS OF INSULAR POSSESSIONS. 


Februaby 27, 1907.—Referred to the House Calendar and ordered to be printed. 


Mr. Parsons, from the Committee on Insular Affairs, submitted the 

following 

REPORT. 

[To accompany H. R. 23568.] 

The Committee on Insular Affairs, to whom was referred the bill 
(H. R. 23568) to secure a better system of report and accountability 
by the governments of the insular possessions of the United States, 
beg leave to report that they have had the same under consideration 
and recommend that said bill do pass, with the following amendments, 
to wit: 

In line 1, page 2, of the bill, strike out all after the word “ report” 
and insert in lieu thereof the following: “Through the Bureau of 
Insular Affairs to the Secretary of War, who is hereby empowered to 
require such additional reports from the officers named as he may 
deem necessary.” 

So that said bill when amended will read as follows, to wit: 

A BILL To secure a better system of report and accountability by the governments of the Insular 

possessions of the United States. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That all reports now required by law to be made by the exec¬ 
utive officers and other officials of the governments of Porto Rico and Hawaii, 
respectively, to a departmental executive officer at Washington, and copies of all 
reports now required by law to be made by the aforesaid executive officers and offi¬ 
cials to the President, shall hereafter be transmitted, through the Bureau of Insular 
Affairs, to the Secretary of War, who is hereby empowered to require such addi¬ 
tional reports from the officers and officials named as he may deem necessary. 

Sec. 2. That the officers in charge of the administration of affairs in Guam, Tutuila, 
and the Midway Islands, respectively, shall hereafter make report through the 
Bureau of Insular Affairs to the Secretary of War, who is hereby empowered to 
require such additional reports from the officers named as he may deem necessary. 

Under the law as it is at present the Philippines are the only insular 
possession reporting to the Bureau of Insular Affairs. The object 
of this bill is to compel all our insular possessions to report to that 
Bureau and to make that Bureau in fact what it is in name—the 


410 





GOVERNMENTS OF INSULAR POSSESSIONS. 411 

Bureau of Insular Affairs. The governor of Hawaii now reports to 
the Secretary of the Interior. The officers in charge of Guam, 
Tutuila, and the Midway Islands are not required to make any reports. 
The administrative officers of Porto Rico report as follows: 

The governor to the Secretary of State, the attorne} r -general to the 
Attorney-General, the treasurer and the auditor to the Secretary of 
the Treasury, the secretary of the interior to the Secretary of the 
Interior, and the commissioner of education to the Commissioner of 
Education. The interests of all these possessions have suffered because 
there has been no central bureau having knowledge of their affairs 
and so charged with looking after their interests. In practice they 
have endeavored to make use of the Bureau. This will in effect give 
them the right to make use of it. It is the only Bureau of the Gov¬ 
ernment equipped for the work. 

Mr. Larrinaga, the Commissioner from Porto Rico, favors the bill, 
and has experienced the undesirability of the present conditions. 
Governor Winthrop, of Porto Rico, has requested it, saying: 

Such a measure would be helpful in providing an office which could furnish infor¬ 
mation without delay to officials and others interested in the affairs of Porto Rico, 
Hawaii, etc., and would also afford the officials of one of our insular possessions a 
better opportunity to benefit by the experience gained in the others. By this means, 
also, a uniform policy of administration would be insured, the value of which, of 
course, can not be overestimated. 

President Roosevelt, in his message of December 11,1906, on Porto 
Rico, advocated the principle of the bill in the following language: 

All the insular governments should be placed in one bureau, either in the Depart¬ 
ment of War or the Department of State. It is a mistake not so to arrange our 
handling of these islands at Washington as to be able to take advantage of the expe¬ 
rience gained in one when dealing with the problems that from time to time arise 
in another. 


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